The Insurance Regulatory and Development Authority of India (IRDAI) has constituted a seven-member committee to examine potential amendments to the Insurance Act, 1938.
The committee, chaired by former State Bank of India chairman Dinesh Khara, will evaluate regulatory provisions and recommend changes.
This move comes as the government prepares to table the Insurance Amendment Bill in Parliament, which includes a proposal to allow 100% foreign direct investment (FDI) in the insurance sector.
According to The Indian Express, the committee has already held its initial meeting as part of the ongoing discussions on regulatory changes.
If approved, the proposed increase in FDI could open the sector to greater foreign participation, potentially affecting market dynamics, investment inflows, and insurance penetration.
Other members of the panel include:
The Insurance Act, originally enacted in 1938 during British rule, provides the legal framework governing the insurance industry. It establishes the foundation for regulatory oversight, including licensing requirements, capital norms, and compliance standards for insurers. The act also governs the roles and responsibilities of insurance agents, ensuring structured operations within the sector.
Finance Minister Nirmala Sitharaman, in her budget presentation for FY26, reiterated the government’s intent to increase the FDI limit in the sector from the existing 74% to 100%.
“This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified,” she said.
M Nagaraju, secretary for financial services at the Ministry of Finance, stated that internal consultations on the proposed amendments have concluded. He highlighted that discussions have focused on key areas such as composite licensing, capital requirements, investment policies, and foreign investors’ repatriation of profits.
“We have almost completed the internal governmental consultations. Then, we will take the next course of action by bringing the proposed amendment bill to Parliament. Once it is approved, those rules will also be notified so that all the reforms we intend to do in the insurance sector to improve penetration will be done through these measures,” he said, as reported by The Indian Express.
The proposed regulatory changes include provisions for composite licensing, differential capital requirements, revisions to solvency norms, the introduction of captive insurers, modifications to investment guidelines, a simplified registration process for intermediaries, and the expansion of financial products that insurers can distribute.
