India’s Parliament has approved legislation that will raise the foreign direct investment (FDI) cap in the insurance sector from 74% to 100%.  

This amendment is part of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, which also grants new regulatory authority to the Insurance Regulatory and Development Authority of India (IRDAI) over matters such as commission payments. 

The bill was first proposed in December last year.  

While introducing the bill in the Lok Sabha, the lower house of the parliament, Finance Minister Nirmala Sitharaman said: “The amendments are expected to further strengthen job creation, skill development and formal employment,” reported Reuters.

The new law amends several long-standing acts including the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the Insurance Regulatory and Development Authority Act of 1999.  

These amendments are intended to open up further investment opportunities in the sector and update how the market is supervised. 

A provision in the bill allows for non-insurance companies to merge with insurance operators, giving more flexibility for business restructuring.  

The IRDAI now has specific legislative powers to set limits on commissions, remuneration, or rewards paid to agents and intermediaries, as well as regulate payment methods and disclosure rules.

Any individual acting as an insurance intermediary without registration under section 42D faces a minimum penalty of Rs100,000 ($1,105), which can increase to to Rs1m.  

Appointing unregistered intermediaries or conducting insurance business through them may result in a minimum penalty of Rs1m, increasing to a maximum of Rs100m. 

This development follows the government’s previous move in 2021, when the FDI limit was increased from 49% to 74%.