100% FDI: Who Will Be The Biggest Winners of This Insurance Reform?

The proposed amendments under the Sabka Bima Sabki Raksha Bill mark a decisive step in reimagining India's insurance ecosystem for the next phase of growth. The move to allow 100% FDI in insurance will enable access to long-term capital, global best practices, supporting innovation and the scaling up of insurance solutions.

According to government data, since 2015, when the government liberalised the foreign direct investment, or FDI, norms, and allowed at first 49% FDI in 2015 and subsequently increased it to 74% in 2021 the sector has received close to Rs 54000 crore as FDI. The hike in FDI limit to 100 per cent will provide a huge fillip to the sector.

Alongside this, stronger regulatory oversight and a sharper focus on policyholder protection together create the conditions for a more resilient, transparent and innovation-led sector.

As India moves towards the vision of Insurance for All by 2047, these reforms can meaningfully accelerate penetration and improve customer outcomes across the sector.

"By raising the FDI limit to 100%, strengthening the powers of the regulator, and creating a dedicated Policyholders' Education and Protection Fund, it paves the way for deeper capital inflows, enhanced competition, and a broader range of innovative products for customers and policyholders. It will prove to be a fundamental catalyst," said Parag Raja, MD & CEO, Bharti AXA Life Insurance.

Besides, the Bill proposes a legal framework for digital public infrastructure in insurance. Leveraging digital public infrastructure can help reduce costs and extend essential insurance products to underserved areas thereby enhancing penetration of insurance. It also proposes one-time registration for intermediaries against the current disposition, which requires insurance intermediaries to renew their registrations every three years.

"Higher FDI can also support stronger financial discipline. Increased scrutiny, better price discovery, and regular health checks will help control costs and reduce inefficiencies across the value chain. With rising competition and improved insurance penetration, the industry is poised for healthy and sustainable growth," said Peuli Das, Partner-Actuarial Services, BDO India.

Over the long term, these structural changes will not only support IRDAI's mission of 'Insurance for All by 2047' but also improve affordability, the quality of service and regulatory safeguards for policyholders, said Parag Raja.

For customers, it means more options, better protection and an insurance industry better equipped to serve the evolving needs of a growing and diverse nation.

The move will not only be instrumental in attracting fresh capital from overseas insurers but also facilitate entry of more players thereby spurring healthy competition leading to better pricing outcomes for customers. This will also develop the secondary and peripheral ecosystem to scale. More importantly, this move will secure robust growth for the insurance sector for the next two decades, as per Anup Rau, MD & CEO, Generali Central Insurance Company Ltd.

With just over 60 insurers operating in both life and general insurance sectors, and many of them functioning as joint ventures, the shortage of capable and willing local partners is evident. Permitting 100 per cent FDI could help address this issue, said Anup Rau.
Allowing 100% FDI in the insurance sector is a landmark reform that aligns India's insurance ecosystem with the long-term vision of Insurance for All by 2047.

The move strengthens the sector's capital base at a time when India needs deeper insurance penetration, higher solvency buffers, and sustained investments in technology, distribution, and product innovation, said Narendra Bharindwal, President, Insurance Brokers Association of India (IBAI).

"On the positive side, full FDI enables insurers to access long-term global capital, advanced underwriting and risk-management expertise, and global best practices in governance, claims servicing, and customer experience. It also enhances the ability of insurers to expand into under-served and emerging segments such as health, crop, catastrophe, cyber, and climate-risk insurance, while improving affordability and product diversity for policyholders over time," commented Narendra Bharindwal.

At the same time, it is important to ensure that foreign capital complements, rather than displaces, domestic entrepreneurship. Strong regulatory oversight by IRDAI will be critical to ensure that long-term capital commitment, policyholder protection, fair distribution practices, and market stability remain non-negotiable. The focus should remain on sustainable growth rather than short-term market expansion.

Overall, 100% FDI is a positive structural reform. Its real success will be measured by how effectively it improves insurance penetration, trust, claims efficiency, and consumer outcomes, especially in Tier-2, Tier-3 and rural India - while preserving a level playing field for all stakeholders.

"By encouraging greater participation, innovation, and capital inflows, the amendment is expected to promote genuine competition, growth, efficiency, and long-term stability, with a positive impact on policy expenses," added Peuli Das, Partner-Actuarial Services, BDO India.

It will foster insurance penetration and advance the long-awaited reformatory vision of "Insurance for All" by 2047 across the nation, leading to higher volumes, economies of scale, reduced expenses, more competitive products, and lower policy rates.

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