Insurance sector 2025 reform pipeline: Promise vs delivery

Over the last three years, IRDAI has laid out an ambitious modernisation agenda spanning legislation, distribution, capital requirements and digital infrastructure.

As India’s insurance sector enters 2026, the gap between reforms announced by the Insurance Regulatory and Development Authority of India (IRDAI) and those that have actually taken effect seem to be increasingly visible.

Over the last three years, IRDAI has laid out an ambitious modernisation agenda spanning legislation, distribution, capital requirements and digital infrastructure.

But while a few reforms, particularly those requiring only regulatory circulars, have been implemented, some of the biggest structural changes remain stuck in legislative queues, ecosystem coordination issues or industry readiness constraints.

Composite licensing: A big idea still waiting for legislation

Composite licensing, one of the most transformative proposals and a part of the Insurance Amendment Act, was designed to allow insurers to operate life, general and health businesses under a single licence. The reform aimed to reduce duplicate capital allocation across group companies, promote multi-line scale and enable insurers to offer combined products. First proposed in the 2022 draft Insurance Laws (Amendment) Bill and reiterated through 2023-24, it was loosely positioned for a pre-2025 rollout. However, it requires amendments to the Insurance Act, which Parliament has not taken up yet. While some practitioners say composite licensing would benefit them , many say they don't understand the rationale behind it. Several large groups with both life and general insurance arms such as SBI, HDFC and Bajaj would face potential conflicts of interest under a composite licence, effectively requiring them to overhaul their entire business structure if they were to adopt the model. However, industry practitioners point out that without legislative approval, insurers have no legal basis to reorganize their operations. As a result, the reform remains purely theoretical and has seen no movement beyond policy discussions.

The movie to 100% FDI: Stuck at policy level

After raising foreign direct investment (FDI) limits from 49 percent to 74 percent in 2021, the government and IRDAI floated the idea of allowing 100 percent foreign ownership in insurers. The proposal was expected to improve capital availability, enhance global participation and strengthen solvency positions. Emerging during consultations in 2022 and incorporated into discussions around the amendment bill in 2023 by the Finance Ministry during the Union Budget this year, the industry briefly anticipated progress by FY25. However, with no Cabinet approval and no bill in Parliament, the shift to 100 percent FDI remains unimplemented. Besides, 2025 has also seen a wave of foreign exits, including players such as Bajaj Allianz and others, which has further dampened momentum around foreign participation. Only two insurers, Generali and Ageas, are currently making full use of the enhanced 74 percent foreign ownership limit.

Bima Sugam: A national digital marketplace still underway

Bima Sugam, a large part of IRDAI’s digital public infrastructure vision, was conceived in 2022 as a unified marketplace where customers could buy, service and claim insurance policies across all segments. Positioned as an insurance equivalent of UPI, the platform was expected to launch in 2024-25. However, the industry is still under discussions over governance structure, shareholding, operational control and funding have delayed progress, as reported by Moneycontrol earlier. While the website has been launched, sources say, the platform and the technical architecture still remains under developmen. Although no fresh launch timeline has been announced, sources told Moneycontrol that the rollout may still be a few months away.

Bima Vistar: A composite cover still on paper

Bima Vistar, conceived in 2022–23, was envisioned as a bundled policy that would merge life, health, accident and property coverage into a single, easy-to-understand contract. The idea was to simplify protection for households, particularly in rural and semi-urban markets, by removing the need for multiple policies and reducing gaps in coverage. Initially expected to debut in 2024–25, the product has struggled to progress. Insurers have yet to finalise pricing, actuarial models or risk-pooling frameworks, all of which are far more complex when multiple risks are combined. The supporting claims protocols and technology architecture also remain incomplete. As of 2025, no insurer has submitted a Bima Vistar product under either Use-and-File or File-and-Use. 

Risk-based capital: Conceptually ready but operationally complex

Risk-Based Capital (RBC), another long-awaited reform, intends to replace India’s current factor-based solvency system with a model that aligns capital requirements to an insurer’s actual risk exposures. Committees began work in 2019, with recommendations published by 2022-23. The expectation was for phased implementation starting 2025. But shifting to an RBC regime requires sophisticated actuarial data, system upgrades and scenario modelling capabilities that smaller insurers have struggled to meet. Concerns about transition volatility, especially for niche and new insurers, have kept IRDAI cautious. The rollout remains pending until the industry demonstrates readiness.

Bima ASBA: Technical challenges delays push timelines

Announced in mid-2023, Bima ASBA was intended to bring an IPO-like “blocked amount” mechanism to insurance. Premiums would be blocked in a customer’s bank account and debited only after proposal acceptance, reducing refund processes and policy rejections. The system was expected to go live by March 1, 2025. However, only two insurers including Bajaj Allianz Life Insurance Company and ICICI Lombard General Insurance Company have been able to go live with Bima ASBA. The rest, sources say, requires their companies to integrate their systems with banks, NPCI’s infrastructure and insurers’ core systems. Synchronising these layers has proven complex, and implementation has been delayed without clarity on when it will materialise. The insurers have separately approached IRDAI seeking revised timelines that align with their individual readiness and capacity.