Big Change in the Insurance Sector! : The Union Cabinet on Friday approved the ‘Sabka Bima, Sabka Raksha (Insurance Laws Amendment) Bill, 2025’.
This bill will be presented in the winter session of Parliament. The government says that the purpose of this new law is to update the old insurance laws of the country and increase the reach of insurance to more people.
However, experts’ opinions are divided regarding this bill. While on one hand a big decision has been taken regarding foreign investment, on the other hand an important demand of the industry has been ignored this time too.
Fully open doors for foreign insurance companies
The biggest change of this bill is to increase the FDI limit from 74% to 100%. This means that now foreign insurance companies will be able to run their business in India even without any Indian partner.
The government believes that this will make the Indian insurance market completely global. Foreign companies will bring with them more capital, new technology and better management systems. This will increase competition in the market and customers can get better service and new insurance products.
What benefit will common policyholders get?
With 100% FDI allowed, competition among insurance companies will intensify. According to experts, customers can get direct benefits from this.
1. Premium prices may become more competitive
2. Claim settlement process can be faster
3. Improvements may be seen in risk management and customer service.
IRDAI gets more powers, LIC also gets relief
Insurance regulator IRDAI is being given more strength to protect the interests of policyholders. Now, like SEBI, IRDAI will also be able to recover ill-gotten profits from companies breaking the rules.
Additionally, one-time registration has been proposed for insurance agents and intermediaries. This will eliminate the hassle of renewing registration again and again and the work will be easier.
The country’s largest insurance company LIC has also got relief from this bill. Now LIC will not have to wait for government approval to open new zonal offices. This will give LIC more freedom in taking decisions and it will be able to compete better with private companies.
No discussion on composite license again
The biggest disappointment with this bill is regarding the composite license. The industry had been demanding for a long time that the same company should be allowed to sell both life insurance and general insurance.
If this system were implemented, it would be easy to take policies like life, health and motor insurance from a single company. Customers do not have to visit different companies. But the government has not yet included this proposal in the bill.
Entry is still difficult for new companies
In this bill, there has been no change in the requirement of capital (Rs 100 crore) for new insurance companies. This means that entry into the market will still remain difficult for small and regional level new players.
Experts say that this bill is a big step in terms of investment, but some important reforms related to customer convenience have not been included in it.
What is the overall benefit to common consumers?
1. Investment of big global insurance companies in India will increase
2. Competition will increase in the insurance sector
3. Insurance policy premiums can be cheap and affordable
4. Expectation of getting the policy on easy terms
5. New insurance products from Global Standard will be available
6. Customer service and claim settlement could be better
7. New employment opportunities will be created in the insurance sector
8. Overall economic development will get a boost