The proposed raising of FDI limit in Indian insurance companies to 100% would bring more players into the market and generate employment opportunities, Finance Minister Nirmala Sitharaman informed Parliament on Tuesday (August 12, 2025).
Further, she said, "improved technologies and automation would lead to faster underwriting, claim processing leading to improved turnaround time thereby reducing cost and enhancing overall efficiency of the sector." The increase in FDI in Indian insurance companies from 74% to 100% was announced in the Union Budget on February 1, 2025.
Parliament Monsoon Session Day 17 updates
The Insurance Act, 1938 governs investment by insurers with a strong emphasis on safety, liquidity, and regulatory oversight by aligning investment by insurers with policyholder interests.
The Act stipulates time, manner, form, conditions and instruments allowed for investment. Insurers are mandated to invest a specified percentage of funds in government securities and other approved securities as specified by Insurance Regulatory and Development Authority of India (IRDAI).
