FDI Hike: According to reports, a law to increase foreign direct investment in the insurance industry to 100% was approved by the Union Cabinet on Friday.
The current Winter session of Parliament, which ends on December 19, may see the introduction of the measure.
The Insurance Laws (Amendment) Bill 2025, which aims to increase penetration, speed up the insurance sector’s growth and development, and improve ease of doing business, is one of the 13 laws scheduled for the next session of Parliament, according to a Lok Sabha bulletin.
As part of new-generation financial sector reforms, Finance Minister Nirmala Sitharaman suggested in this year’s Budget address that the insurance industry’s foreign investment cap be raised from the current 74% to 100%.
Foreign direct investment (FDI) in the insurance industry has brought in Rs 82,000 crore so far.
The finance ministry has suggested changing a number of clauses in the 1938 Insurance Act, such as lowering paid-up capital, adopting a composite license, and increasing foreign direct investment (FDI) in the insurance industry to 100%.
Along with the Insurance Act 1938, the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act 1999 will also be revised as part of a comprehensive legislative effort.
The LIC Act revisions include giving its board more authority to decide on operational matters like hiring and branch growth.
The main goals of the proposed amendment are to advance policyholders’ interests, improve their financial security, and make it easier for new companies to enter the insurance industry, all of which would spur economic expansion and job creation.
In order to accomplish the aim of “Insurance for All by 2047,” such improvements will assist improve the insurance industry’s efficiency, make conducting business easier, and increase insurance penetration.
The main law that establishes the legal foundation for insurance in India is the Insurance Act of 1938. It establishes the foundation for how insurance companies operate and governs the interactions between insurers, their policyholders, shareholders, and the Irdai, the regulatory body.
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