Insurance Amendment Bill 2025: 7 updates that will impact every insurance customer in India

One of the key features of the bill is to allow up to 100% Foreign Direct Investment ( FDI) in insurance companies, opening doors to more foreign players in India.

"The Insurance (Amendment of Insurance Laws) Bill, 2025, is a noteworthy reform in the benefit of the insurance industry. Allowing 100% FDI should prove to be a strong vote of confidence for the consumers through access to deeper capitalisation, long–term investment, global best practices and accelerated innovation. For policyholders, this shift has the potential to increase choice and value. Increased international participation will allow insurers to broaden and refine their offerings, enhance digital capabilities, and strengthen claims management systems," said Manish Dodeja, Chief Operating Officer, Care Health Insurance

Over time, customers can expect products that could service their needs with solutions that have absorbed global experiences.Open gateways to global investments will imply greater competition in a larger market. This will, in turn, enhance service quality and assist in broadening insurance coverage in areas with limited access, such as semi-urban and rural markets with solutions and learnings from across the globe. With strong regulatory directives and initiatives to ensure growth and development of the sector, such as the Policyholders’ Education and Protection Fund, this can create a resilient and customer-centric ecosystem," said Manish Dodeja.

1. 100% foreign investment in insurance

Till now, foreign companies could own only a 74% stake in Indian insurance companies. This Bill increases that to 100%. Replying to a debate on the bill, Finance Minister Nirmala said, "The increase in the FDI limit to 100 per cent will pave the way for more foreign companies to enter India, as in many cases, they do not find joint venture partners due to various reasons, she said.

The minister also exuded confidence that with more companies, the competition will increase, and premiums should drop.

2. Mandatory accurate records

The Bill requires insurers to maintain highly detailed and verified records of policyholders’ personal information to prevent errors during claims.

Section 15, Clause 14(1)(a)(i): "...in respect of every policy issued by the insurer to an individual, the name, date of birth, address and (where available) email address of the policyholder, Aadhaar number or Permanent Account Number... and a record of any transfer, assignment or nomination..."

3. Right to data accuracy and security

Insurers now carry the burden of proof to ensure the accuracy, completeness, and security of policyholder data.

Section 15, Clause 14B: "An insurer... shall take such steps... to ensure that the information of the policyholders maintained by such insurers or other regulated entities is accurate, complete and updated in all respects, secure and duly protected against any loss or unauthorised access or use..."

4. Privacy restriction on sharing your data

This is a major benefit that prevents companies from selling your data without permission.

Section 15, Clause 14C(1): "...insurers and other regulated entities of the Authority shall ensure that the Know Your Customer (KYC) information of the policyholders... is maintained with utmost confidentiality and would be comprehensively protected."

The Bill explicitly lists the only three scenarios where your data can be shared, effectively banning the unauthorised sale of your information to third-party marketers.

Section 15, Clause 14C(2): "...the said information shall not be parted or shared with any third party, except,— (a) where disclosure is compulsory in law; (b) where there is a duty to the public to disclose; or (c) where the disclosure is made with the express consent of the customer."

5. Transparency in claim rejections

Insurers must now provide clear records of claim outcomes, including reasons for rejection.

Section 15, Clause 14(1)(b): "...a record of claims... and the date on which the claim was discharged, or, in the case of a claim which is rejected, the date of rejection and the grounds thereof."

6. Ease of access through digital policies

Section 15, Clause 14(2): > "Every insurer shall... endeavour to issue policies... in electronic form, in such manner and form as may be specified by the regulations."

7. Stricter penalties for non-compliance

The Bill introduces heavier penalties for insurers and intermediaries who fail to comply with regulatory requirements:

• Up to ₹1 lakh per day for non-compliance, subject to a maximum of ₹10 crore.

• Unregistered insurance intermediaries can face fines of up to ₹1 crore.

The Bill states that in the case of “Indian re-insurers”, the words “a minimum of” shall be inserted. Under the substituted Section 102, any insurer or intermediary that fails to comply with regulatory requirements “shall be liable to a penalty which shall be up to one lakh rupees for each day during which such failure continues, subject to a maximum of ten crore rupees”. The amendments also introduce penalties for unregistered insurance intermediaries, with fines extending up to ₹1 crore.