The government has tabled the Insurance Amendment Bill, 2025 in the Lok Sabha, proposing some of the biggest changes India’s insurance sector has seen in years. While the headline change is allowing 100% foreign investment in insurance companies, the Bill goes much further.
According to the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, the goal is simple — make insurance stronger, safer and more customer-friendly, while bringing in more money and competition into the sector.
Here are 5 key takeaways from the Bill that directly affect insurance customers.
1. 100% foreign investment could mean more options for customers
According to the Bill, foreign investors can now own up to 100% stake in Indian insurance companies, compared to the current 74% limit.
For customers, this could slowly translate into more insurance companies entering India, better and more innovative insurance products, improved digital services and faster claims, and healthier competition, which may help keep premiums reasonable.
India’s insurance coverage is still low, and according to the Bill, fresh global capital is expected to help insurers reach more people.
2. Your insurance data gets stronger protection
One of the most important customer-focused changes in the Bill is around data safety and privacy.
According to the Bill, insurers and intermediaries must keep customer data accurate, updated and secure; protect KYC details like Aadhaar, PAN and policy information; and not share personal data with third parties without consent, unless required by law.
In simple terms, the Bill clearly puts responsibility on insurers to safeguard your personal information.
3. Digital policies and clearer claim records
According to the Bill, insurers will have to maintain proper records of policies and claims, including when a claim was filed, whether it was settled or rejected and clear reasons in case of rejection. The Bill also encourages issuing policies in electronic form, especially for larger policies.
For customers, this means less paperwork, better tracking of claims, and more clarity if something goes wrong.
4. Tighter grip on mis-selling by agents
Many insurance buyers have faced issues of mis-selling — buying products that don’t really suit their needs. According to the Bill, the insurance regulator will now have the power to set limits on commissions paid to agents, decide how commissions should be disclosed and act against agents or intermediaries who harm customer interests. The idea is to ensure insurance is sold for protection, not just for commissions.
5. Heavy penalties if insurers harm customers
The Bill also sends a strong message to insurance companies. According to the Bill, insurers and intermediaries can face steep penalties if they ignore regulatory directions, delay filings or misreport information, and act against the interest of policyholders.
Penalties can go up to Rs 1 lakh per day, with overall fines running into crores in serious cases. Details of such actions will also be made public, according to the Bill. This is meant to make insurers more accountable.
The bigger picture: How this Bill may change insurance in India
Beyond customer-level changes, according to the Bill, the insurance sector itself is being modernised.
The Bill simplifies rules for insurers and intermediaries, strengthens the powers of the insurance regulator, encourages new players and innovation, and focuses on protecting policyholders at every step.
The overall aim, according to the Bill, is to build an insurance system that is trustworthy, competitive and ready for the future.
Summing up…
Yes, 100% FDI has grabbed attention. But for everyday customers, the bigger impact of the Insurance Amendment Bill lies in better data protection, clearer claims, less mis-selling and stricter action against insurers who go wrong.
If implemented well, according to the Bill, these changes could finally make insurance in India simpler, safer and more customer-friendly.