100% FDI in Insurance Permitted: How will it Impact your Policies, Premiums and Claims?

India’s Insurance sector is set for an overhaul as the Union Cabinet has approved a rule change allowing 100% foreign ownership in insurance companies. For consumers, this move could quietly reshape how insurance products are priced, sold, and serviced in the coming years.

The decision is part of the Insurance Laws (Amendment) Bill, 2025, titled “Sabka Bima Sabki Raksha”, which is introduced by the Finance Minister Nirmala Sitharaman in the Lok Sabha. The bill aims to bring more people under insurance cover and make the sector stronger, more competitive, and more customer-friendly.

What has changed?

Earlier, foreign investors were allowed to own up to 74% in insurance companies in India. The new proposal raises this limit to 100%, allowing global insurance players to fully own and operate insurance businesses in India.

The Bill also proposes amendments to key laws, including the Insurance Act, 1938, the LIC Act, 1956, and the IRDAI Act of 1999. These amendments are intended to support the government’s long-term objective of securing “Insurance for All by 2047” and enhancing the ease of doing business.

More Competition, Better Products

For policyholders, the most significant effect is expected to come from increased competition. As global insurers bring new capital and international expertise, companies will gain greater scope to come up with new & innovative products, and will also enhance their service quality due to increasing competition.  

“Opening up insurance to 100% foreign investment comes at the right time, especially with the goal of insurance for all by 2047,” stated Saharsha Keshkar, Head of Strategy and International Business at EDME Insurance Brokers Ltd.

He emphasized that the sector requires long-term capital and global proficiency to access under-insured markets. “Done right, this move can help insurers build better products, improve service quality, and scale distribution beyond the metros,” Keshkar said, adding that consumers should benefit from a wider choice and more dependable coverage.

Greater Clarity for Global Investors

Industry experts anticipate that the move also provides foreign investors with better clarity and confidence that would lead to accelerated investment choices.    

“While the intent to allow 100% FDI in insurance was indicated earlier this year, this announcement is a positive step in translating that intent into action,” commented Debashish Banerjee, Partner at Deloitte India.    

He said that numerous global insurers are already assessing India as a long-term market. He further added, “Greater clarity on ownership norms will help in moving those conversations forward and encourage investors to commit capital and capability more meaningfully”.

Risk Solutions for Businesses and Individuals

The impact of this move is not limited to retail customers alone. Businesses and communities could also gain from more sophisticated risk and insurance solutions.

“Allowing 100% FDI in insurance is a pivotal step toward strengthening India’s risk and insurance ecosystem,” said Rishi Mehra, Chief Executive Officer, India and Head of Strategy, Human Capital, Asia Pacific, Aon.

In his view, the move brings global expertise, more substantial capital, and long-term certainty into a sector that underpins economic stability. “It means more innovation, broader product choice, and stronger risk solutions for businesses and communities,” he said.

Faster Digital Push and Broader Reach

Insurers (including insurance companies) also anticipate that the reform will accelerate digital adoption and enable insurers to reach a larger population, particularly in smaller towns and rural areas.

“Raising FDI in insurance to 100% will drive greater capital infusion into the sector,” stated Prashant Tripathy, Managing Director and CEO of Axis Max Life Insurance.

He added that the policy will foster innovation, intensify competition, and speed up insurance penetration. “With strengthened investment, the industry can further drive digital transformation, develop customer-centric solutions, and expand its reach to those who need it most,” said Tripathy.

How Will it Impact You?  

For an average consumer, the impact may not be immediately visible. However, over time, this could result in more thoughtfully designed policies, more efficient & smoother claim settlements, a greater number of digital services, and a wider selection across life, health, and general insurance.

As the Bill progresses through Parliament and detailed rules are finalised, the real test will be how effectively these reforms convert into increased trust, affordability, and protection for policyholders. If implemented well, 100% FDI could become a quiet but powerful move toward making insurance simpler, more reliable, and more accessible for all.