India Opens Insurance to 100% Foreign Ownership: What the Sabka Bima Sabki Raksha Act Changes

India has changed its insurance law to allow foreign investors to own up to 100% of an insurance company. The change came through the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, a name that translates roughly as insurance for all, protection for all. According to PRS Legislative Research, the bill was introduced and passed in the Lok Sabha on December 16, 2025, and passed by the Rajya Sabha on December 17, 2025. India Briefing reports that the regime took effect on February 5, 2026. An earlier version of this article described a May 2, 2026 notification with a specific statutory order number, which could not be confirmed against the sources reviewed, so this version relies on the dates in the legislative record and the legal commentary.

The headline change is on ownership. Foreign investors, including foreign direct investors and foreign portfolio investors, may collectively hold up to 100% of an Indian insurer's equity, subject to conditions set by the central government. India Briefing says the cap is enabled by a new Section 3AA in the Insurance Act, 1938, and that the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2025 remove the old 74% limit and align with the foreign exchange rules for non-debt instruments. The history shows steady liberalisation: a cap of 26% was raised to 49% in 2015, to 74% in 2021 and now to 100%. Governance conditions remain. The chairperson, managing director or chief executive must be an Indian citizen, which commentators describe as requiring resident Indian leadership. The sources reviewed do not describe board composition rules in detail.

The Act does more than raise the cap. It amends three laws: the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the Insurance Regulatory and Development Authority Act, 1999. India Briefing says it gives the Life Insurance Corporation more operational autonomy, including the ability to open zonal offices within India and to align overseas operations with host-country regulations. PRS notes that the bill amends the LIC Act but does not set out the details on its summary page. An earlier claim that foreign ownership in LIC is capped at 20% was not confirmed in the sources reviewed for this update and is not repeated here.

Several provisions lower barriers for reinsurance and ownership changes. PRS records that the net owned fund requirement for foreign reinsurers falls from Rs 5,000 crore to Rs 1,000 crore, and the threshold at which IRDAI approval is needed for a transfer of shares rises from 1% to 5% of paid-up share capital. It also removes the Rs 100 crore minimum paid-up capital requirement for insurance co-operative societies in life, general and health insurance, extends central government powers related to special economic zones to International Financial Services Centres, and widens the definition of insurance intermediaries to include managing general agents and insurance repositories. India Briefing adds that intermediaries move to one-time licensing, that regulators may suspend a licence rather than cancel it outright, and that non-insurance entities can merge with insurers subject to regulatory approval.

The regulator receives tougher tools. According to PRS, IRDAI can approve schemes of arrangement between an insurer and a company that does not carry on insurance business. It can supersede an insurer's board of directors and appoint an administrator if the insurer is carrying on business in a manner prejudicial to policyholders. It can specify regulations on remuneration, commissions or rewards paid to agents and intermediaries, including limits, payment methods and disclosures, and it can inspect and investigate intermediaries. The Act also creates a Policyholders' Education and Protection Fund, administered by IRDAI, funded by grants and donations, penalties received by IRDAI and other sums set by regulations. This is the fund that regulations later address. The sources reviewed did not confirm the final status of those regulations.

Not everything started at once. India Briefing says Section 25, which deals with common officers and full-time officers, was excluded, and its commencement date will be announced separately.

Why does it matter? India Briefing puts the country's insurance penetration at about 3.7% of GDP, compared with a global average of about 7%. The government's goal is broader coverage, and the argument for foreign ownership is that insurers with more capital can underwrite more business and invest in distribution and technology. Skeptics point out that capital alone does not guarantee better outcomes for consumers, and that mis-selling and slow claims have been persistent complaints. Supporters of the stronger supervisory powers say they help address this by giving IRDAI clearer authority to act when a firm fails policyholders.

What should customers expect? In the short term, nothing changes for an existing policy, because the terms of a contract remain the same whoever owns the insurer. Over time, customers may see new entrants, joint ventures converted to full foreign ownership and more product choice. The checks that matter stay the same: compare premiums and benefits, read exclusions, look at the insurer's published claim settlement record and keep documents. For investors, the legislation widens the options for foreign companies, but the pace of new entry will depend on commercial decisions, not just the law.

Readers should treat the dates and provisions here as based on the legislative record and published legal analysis. For the exact legal text, the Act and the rules issued under it are the authoritative sources.