FDI cap hike to 100% in insurance to boost coverage, jobs: Experts

Increasing the foreign direct investment limit to 100 per cent in the insurance sector will help expand coverage, create jobs and make life cover policies more affordable and accessible, said experts.

They were commenting on the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, which was passed by the Parliament on Wednesday. The bill seeks to raise FDI (foreign direct investment) limit in the insurance sector from 74 per cent to 100 per cent.

Terming the legislation as a landmark reform, Bajaj General Insurance MD and CEO Tapan Singhel said it reflects a government that has listened carefully to citizens and industry stakeholders and responded with a long-term vision.

By strengthening policyholder protection, improving transparency, and empowering the regulator, the Bill builds trust at the core of the insurance system, Singhel, who is also the chairman of the General Insurance Council, said.

"This will help expand insurance coverage, create jobs across the value chain, and make insurance more accessible and affordable," he said.

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, would lead to amendments in the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.

The proposed FDI move will not only be instrumental in attracting fresh capital from overseas insurers but also facilitate the entry of more players, thereby spurring healthy competition, leading to better pricing outcomes for customers, said Anup Rau, MD & CEO of Generali Central Insurance Company Ltd.

This will also develop the secondary and peripheral ecosystem to scale, Rau said, adding, more importantly, this move will secure robust growth for the insurance sector for the next two decades.

IndusInd General Insurance Company CEO Rakesh Jain said that this reform directly addresses the industry's long-standing need for stronger balance sheets, enabling insurers to invest meaningfully in advanced underwriting, digital infrastructure, and climate-resilient risk solutions.

For customers, Jain said, this will translate into more sophisticated products, faster and more efficient claims processes, and greater confidence in the sector's ability to support India's development agenda.

"The decision to raise the FDI cap in insurance to 100 per cent is a bold step by the government to offer better products, reduce risk, improve claims management, and, of course, reach the most significant cohort: those who are unaware of insurance and its benefits," Zopper co-founder Mayank Gupta said.

The decision will boost innovation, enhance competition, and make insurance access simpler, stronger and more accessible for all, he added.

Khaitan & Co Partner Aravind Venugopal expects strong interest from global insurers and financial sponsors because the ability to exercise full management control materially improves governance, speed of execution and accountability.

The bill provides for a robust regulatory environment while enabling ease of doing business for investors, and aligns with global standards at the same time, guarding the interest of the policyholders, JSA Advocates & Solicitors Partner Sidharrth Shankar said.