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

What is the Sabka Bima Sabki Raksha Act?

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 is the law that amended the Insurance Act, 1938, the LIC Act, 1956 and the IRDA Act, 1999 in one package. Its headline change lets foreign investors own up to 100% of an Indian insurance company, up from 74%. It also gives IRDAI wider powers over intermediaries, raises penalties, eases several capital and compliance rules, and creates a fund for policyholder education. The name means "insurance for everyone, protection for everyone".

The Bill was introduced in Lok Sabha in December 2025 and passed by both Houses in the winter session. By notification S.O. 490(E) dated 3 February 2026, the Central Government brought the Act into force from 5 February 2026 for all provisions except section 25 of the amending Act. Section 25 is the clause that substitutes section 32A of the Insurance Act, extending the bar on common managing directors and officers to all insurers, so the old section 32A, which applies only to life insurers, continues for now.

Key provisions of the 2025 Act

The rules that put the foreign investment change into effect, the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2025, were notified on 30 December 2025. DPIIT's Press Note 1 (2026 Series) then amended the FDI policy to allow 100% under the automatic route, with at least one of the chairperson, managing director or CEO required to be a resident Indian citizen. LIC's own foreign investment limit stays at 20%.

The Act did not change the core policyholder sections on assignment (38), nomination (39) or the three-year limit on questioning a policy (45).

Regulations that followed in 2026

IRDAI has been converting the Act into detailed rules. On 30 July 2026 it notified the IRDAI (Insurance Intermediaries) (Amendment) Regulations, 2026, which replace three-year renewals for corporate agents, brokers, insurance marketing firms and web aggregators with continuing registration on payment of an annual fee. Existing intermediaries must obtain a fresh certificate by 31 January 2027 (31 March 2027 with an additional fee), and from 1 January 2027 the individual seller must be identified on the proposal and policy. IRDAI also notified the Policyholders' Education and Protection Fund Regulations, 2026 under the new section 16A of the IRDA Act, and approved regulations on the manner of imposing penalties.

What the Act did not do

Several ideas discussed before the Bill did not make it into the law. The Act does not create a composite licence: an Indian insurance company must still have life, general, health or reinsurance as its sole purpose. It does not lower the minimum paid-up capital of ₹100 crore for insurers or ₹200 crore for reinsurers. Proposals to let insurers distribute other financial products were also left out. The Act does define "class of insurance business" in a way that lets the government notify new classes later, which some lawyers read as groundwork for future reforms.

What the 2025 Act means for distribution

• More foreign-owned insurers and capital. Full ownership makes it easier for foreign partners to buy out Indian joint venture partners or enter alone. For distributors this can mean new insurers competing for bank and broker shelf space, and existing partners with more capital to spend on growth.
• Perpetual intermediary licences. Brokers, corporate agents and other intermediaries no longer face a renewal cliff. The trade-off is that a licence can be suspended or cancelled at any time for breaches, and the July 2026 regulations add an annual supervisory fee, periodic training for key staff and seller-level tagging of every policy, so ongoing compliance matters more than renewal paperwork.
• Commission caps are back on the table. Section 40 now lets IRDAI set commission limits. IRDAI's September 2026 consultation paper on distribution economics, which cites the Act, proposes product and channel caps and lower expense limits. Channel P&Ls built on current payout levels need stress testing.
• Unregistered selling is a direct liability. The new section 105BA fines both an unregistered seller and the insurer or intermediary that transacts through one, with penalties of up to ₹1 crore for the latter. Lead partners, sub-brokers and field associates who sell without a valid registration are a real exposure.
• Disgorgement for intermediaries. IRDAI can now order an intermediary to give up gains made through a violation. Mis-selling that earned commission can be clawed back by order, not only by contract.
• New intermediary types. Managing general agents, which underwrite and administer on an insurer's behalf, are now recognised in law. Detailed rules will decide how they work in India.