The insurance industry of India is on the curve of some big reforms with the coming of the Insurance Amendment Bill 2025. The Insurance Regulatory and Development Authority of India (Irdai) is currently working on a regulatory framework to ensure a smooth transition once this Bill is passed by the Parliament.
The regulatory body has established a high-level committee under the leadership of ex-State Bank of India (SBI) chief Dinesh Khara, cites a report by CNBC TV18. This committee has also boarded representatives with different expertise such as leaders from life and general insurance sectors, legal experts, and banking officials. It is set to prepare a draft of regulations vis-a-vis the proposed amendments.
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Subsequently, the report noted that the committee’s focus will be on framing operation guidelines and not recommending any modifications to the amendments. The goal is to ensure that the new regulations align with the broader objectives expected out of these reforms.
Additionally, it is being said that the government might table the Bill in the Parliament during the next two sessions. The Committee has been established so that the Irdai is prepared with a framework by the time the Insurance Amendment Bill is brought into motion.
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What Is the Insurance Amendment Bill?
The Bill aims to bring reforms in the insurance laws that will ensure more accessibility and affordability of insurance for buyers across all spectrums. With an eye on promoting the expansion of the insurance industry, the three key changes under this Bill are;
100% FDI: Raising the limit of foreign direct investment (FDI) in the insurance sector to 100 per cent from the existing 74 per cent cap.
Reducing the paid-up capital requirement for insurance companies
Composite License: Bringing a ‘composite license’ for insurers which will allow them to offer both life and non-life insurance products. The existing rules require a company to have separate licenses if they want to sell both life and non-life insurance products. A composite license will consolidate their operations while also reducing compliance burdens and costs for insurers.
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Other than these key reforms, these amendments also intend to bring a more ‘liberal’ setup for insurance agents in India. Currently, insurance agents can only represent one insurer in each category, namely - life, general, and health. This amendment will allow agents to partner with multiple insurers across categories.
However, the Irdai will have to ensure that these new partnerships don’t lead to a conflict of interest.
With the establishment of this committee, the regulator is working on setting compliance and operational guidelines that would set a benchmark for the best practices in the industry.
