House clears bill on 100% FDI in insurance

New Delhi: Parliament on Wednesday cleared the The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 allowing 100% foreign direct investment in the insurance sector.

Finance minister Nirmala Sitharaman in reply to the debate in Rajya Sabha said opening up the sector would attract new insurers, intermediaries, and allied service providers, expanding the overall insurance ecosystem and creating net employment.

"Overall, the amendments are expected to strengthen job creation, skill development and formal employment," she said. The Rajya Sabha later passed the bill, already approved by the Lok Sabha on Tuesday.

The finance minister said norms by the Insurance Regulatory and Development Authority of India (IRDAI) provide enough safeguards for protecting the interests of policyholders.

Sitharaman noted that the companies have to make provisions for all 'incurred but not reported' and 'incurred but not enough reported' liabilities. "The profits are calculated only after providing for these liabilities," she said.

Sitharaman countered the Opposition saying the bill was not rushed and as early as November 2024, the government wrote to all states and Union Territories with a clear invitation to give comments and suggestions. "This was a structured and documented inter-governmental consultation, not an afterthought," she said, noting that inputs were sought from insurers, regulators, industry bodies, and the public through the department's official website, and over 13,000 responses were received.

The finance minister negated concerns that the amendments will affect employment. As the market deepens, agents, brokers, and intermediaries will benefit from a larger market, more products, and wider customer outreach, she said. The number of employees, agents and micro agents have grown by almost three times from 30.14 lakh in 2014-15 to 88.17 lakh in 2024-25, she added.