FM announces only one reform from new Insurance Bill, others left out

In the Union Budget 2025 presentation, Finance Minister Nirmala Sitharaman announced only one reform from the much anticipated Insurance Amendment Bill -- an increase in the Foreign Direct Investment (FDI) limit for the insurance sector from 74 percent to 100 percent. However, several other proposed changes were left unaddressed.

"The increase in FDI requires parliamentary approval, which is why it was introduced in the budget," explained Nilesh Sathe, a former member of IRDAI.

"The other reforms, for reasons unknown to me, have been deferred, but will likely be introduced in the very near future," he added.

One of the key reforms was the introduction of a composite license, which would have allowed insurers to offer both life and non-life insurance products under a single entity, streamlining operations and potentially reducing costs for companies like Life Insurance Corporation of India (LIC). Additionally, the bill aimed to ease regulatory requirements, particularly those concerning company directors, to foster a more conducive environment for business operations.