The Union Cabinet on Friday approved a proposal to raise the foreign direct investment (FDI) limit in the insurance sector to 100 per cent, clearing the way for the Insurance Laws (Amendment) Bill, 2025 to be tabled in the Winter session of Parliament, which concludes on December 19.

A Lok Sabha bulletin has listed the bill among 13 legislations scheduled for consideration. The proposed amendments aim to deepen insurance penetration, accelerate sectoral growth and improve ease of doing business.

Finance minister Nirmala Sitharaman had announced the move to increase the FDI cap in this year’s Union Budget as part of a push for next-generation financial reforms. The sector has attracted ₹82,000 crore in FDI so far.

Key changes proposed under the Insurance Act, 1938 include lowering paid-up capital requirements, introducing composite licences and permitting 100 per cent foreign ownership of insurers. The government also plans amendments to the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.

The changes to the LIC Act will provide its board greater autonomy over operational decisions such as branch expansion and recruitment.

Officials said the reforms aim to strengthen policyholder protection, improve financial security and encourage new entrants, thereby boosting competition and employment generation. Industry executives welcomed the move, saying full foreign ownership will provide insurers access to long-term capital.

Sharad Mathur of Universal Sompo General Insurance said the reform can help firms expand operations and improve risk management. Alok Rungta of Generali Central Life Insurance and Narendra Ganpule of Grant Thornton Bharat said the decision signals confidence in the sector’s long-term growth potential.