Parliament on Wednesday passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, with Finance Minister Nirmala Sitharaman assuring lawmakers that opening up the insurance sector will expand the ecosystem and generate net employment. The Rajya Sabha cleared the Bill following the Minister’s reply, a day after it was passed by the Lok Sabha.
Replying to the debate, Sitharaman said the Insurance Regulatory and Development Authority of India (IRDAI) mandates a minimum solvency ratio of 1.5 for all insurance companies, requiring assets to be at least 1.5 times their liabilities. “Also, 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. These norms provide enough safeguards for protecting the interests of policyholders,” she said.
Addressing concerns about public sector insurers, the Finance Minister said the government continues to empower the Life Insurance Corporation of India (LIC). “LIC continues to enjoy the trust of our citizens and perform well to the expectations. LIC’s Total Asset Under Management (AUM) increased by 6.45% to Rs. 54.52 lakh crores in FY 2024-25. The Solvency margin of LIC improved to 2.11 from 1.98. LIC has also registered growth in Net Value of New Business (VNB), which stands at Rs. 10,011 crores, compared to Rs. 9,583 crores the previous year,” she said.
Sitharaman rejected apprehensions that the amendments would hurt employment. “A concern was raised that Insurance Amendments will adversely affect employment. Opening up the sector will attract new insurers, intermediaries, and allied service providers, expanding the overall insurance ecosystem and creating net employment,” she said, adding that agents, brokers, and intermediaries would benefit from a deeper market and wider customer outreach.
She also dismissed claims that the legislation was being rushed. “We are not rushing through this Bill. As early as November 26, 2024, the Government wrote to all States and Union Territories with a clear invitation to provide comments and suggestions. This was a structured and documented inter-governmental consultation, not an afterthought,” Sitharaman said, noting that over 13,000 responses were received from insurers, regulators, industry bodies, and the public.
The Finance Minister said the amendments are expected to strengthen job creation, skill development, and formal employment. She also highlighted the establishment of a National Health Exchange to enable faster and seamless settlement of health insurance claims between hospitals and insurers.
“Our Government is deeply committed to expansion of affordable Insurance in rural areas for common man,” she said, citing flagship schemes such as PM Jeevan Jyoti Yojana, PM Suraksha Bima Yojana, PM Jan Arogya Yojana, and PM Krishi Bima Yojana. “Together, the Jan Suraksha schemes have provided a safety net with total enrolments being over 81 crore and settled claims to the beneficiaries to the tune of Rs 23,440 crore,” she added.
Sitharaman said insurance sector reforms since 2014 have focused on widening coverage for people, businesses, and agriculture. She noted that the PM Fasal Bima Yojana is implemented by 13 private insurers and five public sector companies, while more than 15 private insurers participate in PMJJBY and PMSBY, cumulatively enrolling over 20 crore persons.
The Bill raises the foreign direct investment limit in insurance companies to 100 per cent from the earlier cap of 74 per cent. It also reduces the net-owned fund requirement for foreign reinsurance companies operating in India from Rs 5,000 crore to Rs 1,000 crore, expands the definition of intermediaries to include managing general agents and insurance repositories, and amends the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the IRDAI Act, 1999.
Sitharaman said the amendments align with the government’s goal of achieving ‘Insurance for All by 2047’ and improving ease of doing business. She added that insurers and intermediaries will be required to include the word “insurance” in their names for greater clarity to customers and that the framework introduces suspension of intermediary licences instead of direct cancellation to allow time for compliance.
Opposition members in the Rajya Sabha opposed the Bill, alleging that it weakens accountability and prioritises corporate interests over policyholders.
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