In a landmark regulatory move, the Government of India has formally brought most provisions of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 into force from February 5, 2026. This significant overhaul of the insurance sector is aimed at enhancing governance standards, expanding capital participation, and improving safeguards for policyholders across the country.
Under the newly implemented reforms, provisions related to governance frameworks, institutional oversight, and policyholder protection have taken effect immediately, ushering in a modernized regulatory regime. Importantly, the updated law allows 100% foreign direct investment (FDI) in insurance companies, a move industry analysts believe will attract global capital and bolster competitiveness. However, Section 25 of the Act has been deferred for a later phase of implementation, ensuring a phased regulatory rollout.
Officials from the finance ministry and insurance regulator have welcomed the changes, suggesting they will create a more inclusive and robust insurance ecosystem, capable of offering increased coverage and greater consumer confidence. The reforms are expected to strengthen India’s insurance penetration, which historically lags global averages. Analysts also suggest that improved regulatory clarity and foreign investment could lead to lower premiums, broader risk pooling, and innovative insurance products tailored to underserved segments.
Critics, however, urge careful monitoring to prevent excessive foreign influence and ensure that local interests remain protected. Overall, the reforms signal a decisive shift towards liberalization and modernization within India’s financial sector.
