Insurance Amendment Bill: Changes Proposed And Likely Impact On Policyholders

The Insurance Laws (Amendment) Bill, 2025 is expected to be tabled in Parliament in the Winter Session which began December 1 and will go on till December 19. The Bill proposes changes in insurance laws, along with laws on life insurance. The proposed changes come with the broader objective to expand access to capital, simplification of licensing, while strengthening governance.

Changes Proposed in the Bill

Providing composite licences for Life, General, and Health insurance: The Bill has proposed a framework for providing composite licence to allow insurers to operate across different kinds of insurance products. This shift from the current model will allow policyholders to get access to a wider variety of insurance products under the same agency. This provision will provide policyholders with a broader coverage under one roof.

100 Per Cent FDI: The proposed changes under the laws is to open the door for 100 per cent foreign direct investment (FDI) in insurance without any restriction to invest in insurance companies. This will help deepen capital markets and bring in long –term capital from overseas. Increasing the FDI limit could also improve competency of insurance products and bring in a wider range of products on offer, along with improving underwriting standards for insurance companies.

Lower Requirement for Investment To New Entrants: One of the proposed changes is to reduce investment requirements for new policyholders. This will help bring in more people into the foray of insurance cover, while also providing a broader cover to a wider customer base. Accordingly, increasing the overall capital flow will also help deepen capital markets as a whole. This could also lead to a rise in specialised insurers providing customised products tailored to specific needs of policyholders.