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Industry Specific - Insurance Central Ministry of Finance Insurance Act, 1938

Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025

21-Dec-2025 | No. 40 of 2025

Government of India has passed Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.
This Act further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the Insurance Regulatory and Development Authority Act, 1999.

Key Highlights:
1. Liberalisation of Foreign Investment:
The Act permits foreign investment, including foreign direct investment and portfolio investment, up to 100% of the paid-up equity capital of Indian insurance companies, subject to prescribed conditions. This marks a significant policy shift aimed at accelerating capital inflows and expanding insurance penetration.
2. Expanded and Rationalised Definitions:
Several key definitions under the Insurance Act, 1938 have been revised. Notably, the scope of "insurance business" has been broadened, health insurance has been comprehensively defined, and the category of "insurance intermediary" has been expanded to include managing general agents, insurance repositories, and other notified entities.
3. Registration and Naming Restrictions:
Only registered insurers may carry on insurance business or use words such as "insurance", "insurer", or "assurance" in their name. Insurance intermediaries and associations may use such terms strictly in accordance with regulations, thereby reducing the risk of misrepresentation and unauthorised activity.
4. Strengthened Governance and Regulatory Oversight:
The powers of the IRDAI have been significantly enhanced. IRDAI may now issue binding directions to insurers and insurance intermediaries, including directions for disgorgement of unlawful gains.
5. Policyholder Data Protection and KYC Framework:
New provisions mandate secure maintenance, accuracy, and confidentiality of policyholder information. Insurers and other regulated entities are permitted to process and rely on KYC information for regulatory and operational purposes, subject to strict confidentiality safeguards.

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