The passage of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill promises insurance and protection for all. By raising the foreign direct investment cap from 74 per cent to 100 per cent, the government has sent a clear signal that it wants capital, competition and global expertise to flow more freely into a sector that remains underpenetrated and unevenly trusted. On paper, the reform aligns with India’s broader strategy of deepening financial markets and expanding risk coverage in a fast-growing economy. Yet, while the Bill modernises governance and regulatory powers, it also sidesteps some structural reforms that could have reshaped the sector more profoundly. The result is a reform that is bold in intent, incremental in design, and cautious where ambition was once promised.
The full liberalisation of foreign ownership is the Bill’s headline change, and it is accompanied by a quiet but significant dilution of earlier safeguards. Draft rule changes already foreshadowed the easing of board residency requirements, the removal of mandatory independent director thresholds for foreign-controlled insurers, and the relaxation of solvency-linked profit retention norms. Together, these moves are meant to make India a more attractive destination for global insurers who have long complained of capital constraints and governance rigidity. In theory, deeper foreign participation should bring scale, product innovation, actuarial sophistication and better risk pricing — all crucial if insurance is to move beyond being a reluctant purchase to a routine financial safeguard. However, the logic rests on a crucial assumption: that competition and capital alone will improve affordability, claims settlement and consumer trust. India’s past experience suggests that these outcomes depend as much on regulatory vigilance and enforcement as on ownership structures. Liberalisation without parallel improvements in transparency and grievance redress can just as easily deepen asymmetries between insurers and policyholders.
Beyond ownership, the Bill expands the definition of “insurance business” and grants the government and the Insurance Regulatory and Development Authority of India (IRDAI) wide enabling powers to introduce new categories of activity without returning to Parliament. It also allows, subject to regulatory approval, the amalgamation of insurance and non-insurance businesses — a sharp departure from the earlier regime that restricted mergers to insurers of the same class. This flexibility reflects the reality of converging financial services, where boundaries between insurance, investment and technology are increasingly porous. The inclusion of managing general agents within the definition of intermediaries, the introduction of perpetual registrations, and tighter oversight of commissions and remuneration all signal a regulator seeking firmer control over market conduct. At the same time, the Bill enhances IRDAI’s powers to frame or amend regulations without prior public consultation in specified circumstances. While speed and discretion can be justified in moments of systemic risk or public interest, bypassing consultative processes also raises concerns about regulatory opacity. In a sector where consumer confidence is fragile, rule-making must not only be efficient but also visibly fair and predictable.
The Bill also introduces a series of technical but important changes: lowering net owned fund requirements for foreign reinsurance branches, tightening rules on data and policyholder record maintenance, and rationalising restrictions on directors holding positions across financial entities. These reforms reflect an attempt to harmonise India’s insurance framework with global practices while responding to the scale and complexity of today’s market. Yet, for all this movement, what the Bill omits is as telling as what it includes. The most conspicuous absence is composite licensing — the long-discussed reform that would have allowed insurers to offer life, general and health products under a single licence. Composite licensing could have reduced operating costs, enabled product bundling, and encouraged insurers to follow customers across life stages, particularly in underserved segments. Its omission suggests either regulatory caution or political reluctance to disrupt existing business models. Equally notable is the decision to retain restrictions that prevent agents from representing more than one insurer per class, a rule that limits consumer choice and keeps distribution channels fragmented. The Bill also drops earlier proposals to create lower capital thresholds for insurers focused on underserved or specialised segments, missing an opportunity to directly incentivise inclusion rather than assuming it will emerge organically from market expansion.
Ultimately, the Sabka Bima Sabki Raksha Bill reflects the government’s balancing act between liberalisation and control, speed and caution, ambition and comfort. It recognises, correctly, that India’s insurance sector needs capital and flexibility if it is to support a larger, more complex economy. But it also reveals an unease about fully reimagining the sector’s architecture in a way that prioritises access, choice and inclusion as explicitly as it prioritises investment. Insurance reform cannot be judged solely by ownership caps or regulatory powers; it must be measured by whether policies become simpler, claims fairer, and protection more universal. In that sense, the Bill is an important step — but not yet a decisive leap. If “Sabka Bima” is to move from slogan to lived reality, future reforms will need to go beyond enabling capital and focus more squarely on the everyday experience of the policyholder, especially those at the margins of the formal economy.