India's Sabka Bima Sabki Raksha Act: What the Law Changes for Insurers, Foreign Investors and Policyholders

India has rewritten parts of its insurance law. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 was introduced and passed by the Lok Sabha on December 16, 2025, and passed by the Rajya Sabha on December 17, 2025, according to the tracker maintained by PRS Legislative Research, an independent organisation that summarises bills before Parliament. The law amends the Insurance Act of 1938, the Life Insurance Corporation Act of 1956 and the Insurance Regulatory and Development Authority Act of 1999. This article summarises the provisions listed by PRS. An earlier version of this article said the Act passed in January 2026 and described several measures, including details of the Bima Sugam marketplace, a risk-based capital timetable, an accounting standards deadline and a goods and services tax decision, that could not be verified against the sources reviewed, so they have been removed.

The most widely reported change is foreign ownership. The Bill raises the limit on foreign investment in Indian insurance companies from 74% to 100% of paid-up equity capital. That allows a foreign insurer to own an Indian subsidiary outright, where previously it needed an Indian partner or public shareholders for at least a quarter of the equity. The change matters for global insurers that want to expand in a market with a large population and relatively low insurance coverage.

A second change concerns reinsurance. The Bill reduces the net owned fund requirement for foreign reinsurers from ₹5,000 crore to ₹1,000 crore. Net owned funds consist of paid-up equity, free reserves, the balance in the share premium account and certain capital reserves, so the change lowers the capital a foreign reinsurer must hold in India to operate through a branch. The aim, as described in public discussion of the Bill, is to attract more reinsurance capacity to India, although PRS records the provision and not the motive.

The Bill also changes the rules for ownership transfers. The threshold above which a transfer of shares needs approval from the Insurance Regulatory and Development Authority of India (IRDAI) rises from 1% to 5% of the insurer's paid-up share capital. That reduces the number of routine transactions that need the regulator's clearance. For insurance co-operative societies, the Bill removes the ₹100 crore minimum paid-up share capital requirement for life, general and health insurance business.

On supervision, the Bill gives IRDAI more tools. It can approve schemes of arrangement between an insurer and a non-insurance company. It can supersede an insurer's board and appoint an Administrator where the insurer's business is prejudicial to the interests of policyholders. It can make regulations on the remuneration, commissions and disclosures of agents and intermediaries, and its powers of inspection and investigation extend to insurance intermediaries. The Bill adds managing general agents and insurance repositories to the existing list of intermediaries, which includes brokers, consultants and third-party administrators. In addition, the central government's power to modify or exempt insurers from the 1938 Act extends to International Financial Services Centres located in Special Economic Zones, and to the intermediaries operating there.

For policyholders, the Bill creates the Policyholders' Education and Protection Fund, which IRDAI administers to protect and educate policyholders. The fund is financed by government, institutional and other grants and donations, by penalties collected by IRDAI, and by other sums set out in regulations. The page does not specify how much will be in the fund or how it will be spent, which will depend on rules to be made.

What are the practical consequences? For foreign insurers, the change creates an option to build full-ownership businesses in India, though each decision will depend on rules, capital and returns, and it will take time to see whether any move. For domestic insurers and their partners, it could affect valuations and the terms of joint ventures, as foreign partners can in principle raise their stakes. For customers, any benefit depends on competition, product design and how well IRDAI uses its expanded powers; a rule change by itself does not lower premiums or speed up claims.

There are limits to what can be said from the sources. The PRS page does not give LIC-specific provisions, though the Bill amends the LIC Act, and it does not mention composite licences, which allow one company to sell life, health and general insurance. Readers interested in those topics should consult the text of the Act and IRDAI notifications, which will set the detail of implementation. Rules and regulations still need to be framed for many provisions, and the effect will depend on how quickly this happens.

The broader context is India's aim, expressed in the Act's title, of insurance for everyone. Low penetration, with many households underinsured against health and life risks, is the reason policymakers want more capital, more competition and stronger protections. Whether this law achieves that will be visible in the coming years in the number of new entrants, product prices, claims settlement records and complaint data published by the regulator.