The upcoming Monsoon Session of Parliament, set to begin around 21 July 2025, will prominently feature the Insurance Laws (Amendment) Bill, which proposes sweeping reforms—including 100% foreign direct investment (FDI) and composite licences for insurers. Meanwhile, proposed amendments to the Insolvency and Bankruptcy Code (IBC) and the Companies Act, 2023 are unlikely to be tabled until a later session.
Background and Context
The Insurance Laws Amendment Bill seeks to modernize three foundational statutes—the Insurance Act, 1938, the LIC Act, 1956, and the IRDAI Act, 1999—to align India’s insurance sector with global best practices. Key features include 100% FDI, permitting composite licensing (insurers can offer both life and non‑life products under one entity), and reforms to regulatory autonomy for IRDAI and LIC.
In contrast, amendments to IBC and the Companies Act have been delayed. While corporate affairs officials had considered clarifying IBC provisions—especially after the Supreme Court’s AGI Greenpac–HNG decision mandating CCI approvals—stakeholder consultations remain incomplete, putting the proposed Section 31(4) change on hold for now.
The government is also awaiting the Parliament Select Committee’s report on the Income‑tax Bill, 2025, which could only be introduced in the Winter Session after the committee’s submission during the Monsoon Session.
Insurance Reforms at a Glance
| Reform Area | Proposal |
|---|---|
| FDI Limit | 100% FDI, up from current 74% cap |
| Composite Licensing | New composite licence allowed; capital requirement ₹150 crore |
| Reinsurer Norms | Net Owned Fund requirement cut from ₹5,000 crore to ₹1,000 crore |
| Regulatory Autonomy | IRDAI and LIC granted greater control over appointments, staffing |
Why It Matters
Boosts Rural Penetration: Easier market entry and capital flow may deepen insurance coverage in underserved regions.
Enhances Competition & Tech Adoption: Composite licensing allows incumbents and new entrants to innovate across multiple insurance segments.
Unlocks FDI Potential: 100% FDI could attract global capital, but uptake depends on return prospects. Industry insiders note that even existing JV partners haven’t fully utilized the current 74% cap.
Tiered Licensing: Flexibility for niche insurers with lower capital thresholds (~₹50 crore) may support micro-insurance models.
Expert Viewpoints
Balasundaram, Secretary General, Insurance Brokers Association of India:
“A 100% FDI for insurers will be welcome, but how many will bite remains to be seen… composite licences [are] an uncharted area in India.”
Narendra Ganpule, Partner, Grant Thornton Bharat:
“The need of the hour is revolutionary changes… the bill attempts to bring about to propel India to achieve its espoused vision of ‘Insurance for all by 2047’.”
IBC and Companies Act Amendments: Hold on Reform
IBC Delays: The proposed amendment to Section 31(4) (CCI approvals in insolvency plans) remains pending due to lack of stakeholder consultation.
Expanded Framework Stalled: Broader reform areas—like group insolvency, cross-border insolvency, and a creditor‐led resolution process—have been finalised at the PMO/Corporate Affairs Ministry level but won’t be tabled until monsoon or later.
Companies Act Reforms: Recommendations to strengthen auditor independence, introduce fractional share issuance, and streamline disclosures are still under government review.
Market & Policy Implications
Insurance: The sector could see a two-tier ecosystem—global players scaling in rural markets while niche insurers focus on micro-insurance, fostering product innovation and reducing mis‑selling.
IBC Resolution Delays: Deferring insolvency reforms may prolong resolution timelines and recovery uncertainty—areas where financial markets and stressed sectors await clarity.
Regulatory Coordination: Insurance reform signals strong executive action, but the staggered legislative timeline suggests Parliament will need to sequence packages across sessions.
Conclusion
The Monsoon Session promises to be an eventful legislative phase, with the Insurance Amendment Bill ready for tabling and potentially transformative in its reforms. However, broader corporate and insolvency frameworks have been parked pending further analysis and input. As India continues modernising its economic legislation, stakeholders await the passage and implementation details of this insurance bill as well as a roadmap for the pending IBC and corporate governance reforms.
