The finance ministry has proposed to amend various provisions of the Insurance Act, of 1938, including raising foreign direct investment (FDI) in the insurance sector to 100 per cent, reduction in paid-up capital and provision for composite licence.

The Department of Financial Services has sought public comments on the proposed amendments by December 10.

According to the proposal, the FDI limit in Indian insurance companies will be raised from 74 per cent to 100 per cent.

This is the second public consultation that DFS has sought on the proposed amendments to the Insurance Act 1938, the Life Insurance Corporation Act 1956, and the Insurance Regulatory and Development Authority Act, 1999. The first was in December 2022.

According to an office memorandum dated November 26, 2024, it is proposed to amend certain provisions of insurance laws to ensure accessibility and affordability of insurance to citizens, foster expansion and development of the insurance industry and streamline business processes.

A comprehensive review of the legislative framework governing the sector has been done in consultation with the Insurance Regulatory and Development Authority of India (IRDAI) and the industry.

The proposed amendments primarily focus on promoting policyholders’ interests, enhancing their financial security, and facilitating the entry of more players into the insurance market leading to economic growth and employment generation, the memorandum stated.

Such changes will help enhance efficiencies of the insurance industry, enabling ease of doing business and enhancing insurance penetration to achieve the goal of ‘Insurance for All by 2047’, it said.