India’s Parliament Approves Bill to Raise Foreign Direct Investment in Insurance to 100%

Core Insights - India's parliament approved a bill to increase foreign direct investment (FDI) in the insurance sector from 74% to 100%, aiming to enhance insurance coverage in the country [1] - The FDI increase is expected to boost investments and improve insurance penetration, which was 3.8% of GDP in 2024 according to Swiss Re Institute [1] Group 1: Legislative Changes - The legislation titled "Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act of 2025" does not include a previously proposed unified license for insurers to offer life, general, and health insurance under one entity [4] - The act allows for the merger of an insurance company with a non-insurance firm if the combined entity operates in the insurance sector [5] Group 2: Impact on the Insurance Sector - The higher FDI limit is anticipated to attract foreign insurers looking to invest in India, particularly those with advanced capabilities in risk management and technology [3] - The act grants the Insurance Regulatory and Development Authority of India (IRDAI) the authority to set commission limits for insurance agents and to recover wrongful gains made by insurance companies [6] Group 3: Industry Context - India's insurance sector comprises approximately 74 firms, including joint ventures with foreign companies like Prudential Plc, Sun Life Financial, and AIG [2] - Currently, four insurance companies have foreign investment capped at 74% [2]