The Lok Sabha on Tuesday passed a bill to raise foreign direct investment in the insurance sector to 100 per cent, with the stated objective of providing insurance coverage to all by 2047.

Replying to a debate on the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, finance minister Nirmala Sitharaman said that higher FDI would attract more players into the sector and help make insurance policies more affordable for consumers.

"Monopoly doesn't give us that advantage, and therefore, the more the competition, the better the rates," she told the House.

The finance minister also stressed the government’s focus on strengthening public sector insurance companies.

"Another priority which our government has given is to strengthen the public sector insurance companies...since 2014, we have been doing a lot of things to improve their financial health," she said.

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, proposes amendments to the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.

The legislation seeks to raise the FDI limit in the insurance sector from the existing 74 per cent to 100 per cent.

The bill also allows for the merger of a non-insurance company with an insurance firm. It received the approval of the Union Cabinet on Friday.

According to the statement of objects and reasons, the legislation aims to accelerate the growth and development of the insurance sector and ensure better protection for policyholders.

It provides for the establishment of a Policyholders' Education and Protection Fund to safeguard policyholders’ interests.

The proposed amendments are also intended to improve the ease of doing business for insurance companies, intermediaries, and other stakeholders, bring greater transparency in regulation-making, and enhance regulatory oversight of the sector.

With respect to the tenure of the Insurance Regulatory and Development Authority leadership, the bill stipulates a term of five years for the Chairperson and other whole-time members or until they attain the age of 65 years, whichever is earlier.

Currently, the upper age limit is 62 years for whole-time members and 65 years for the Chairperson.