Context:
The Insurance Laws (Amendment) Bill, proposing major sectoral reforms including 100% foreign direct investment (FDI) and composite licensing, is expected to be tabled in the Monsoon Session of Parliament starting 21 July 2025. The bill aims to modernize India’s insurance laws and attract global capital, while enhancing industry efficiency and regulatory autonomy.
Key Proposals in the Bill:
- 100% FDI in Insurance:
- Currently capped at 74%, the bill proposes allowing full foreign ownership, potentially unlocking global capital inflows.
- Composite Licensing Regime:
- A composite licence will permit insurers to offer both life and non-life products under one entity.
- Proposed capital requirement: â‚ą150 crore (higher than existing â‚ą100 crore for insurers and â‚ą200 crore for reinsurers).
- Inspired by models in Singapore, Malaysia, UK.
- Liberalization for Foreign Reinsurers:
- Net owned fund requirement cut from â‚ą5,000 crore to â‚ą1,000 crore, easing entry and operations.
- Legislative Changes Proposed:
- Amendments to the Insurance Act, 1938, LIC Act, 1956, and IRDA Act, 1999.
- Will provide greater operational autonomy to IRDAI and LIC for appointments, staffing, and infrastructure.
- Simplified Regulatory Structure:
- Designed to minimize the need for future amendments to LIC-related laws.
- Focus on regulatory clarity, ease of doing business, and market preparedness.
Status of Other Legislations
- Income Tax Bill, 2025:
- Final report from Parliament select committee (led by Baijayant Panda) expected on Day 1 of Monsoon Session.
- Introduction likely in Winter Session (Nov-Dec 2025).
- IBC and Companies Act Amendments:
- Not expected in the Monsoon Session due to pending internal reviews.
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