Parliament Approves Sabka Bima Sabki Raksha Insurance Amendment Bill: 7 Major Updates

The Insurance Amendment Bill 202 officially titled the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025. It marks one of the most important reforms in India’s insurance sector in recent decades. Passed by Parliament of India on 17 December 2025, the law directly affects every insurance customer in the country.

Why Insurance Law Needed an Update

• India’s insurance laws were largely designed for a paper-based, low-penetration era.
• With rapid digitisation rising policyholder numbers, and increasing data risks, gaps began to appear in areas like data accuracy, claim transparency, and accountability of insurers.
• At the same time, India aims to expand insurance coverage under the vision of “Insurance for All” which requires capital, innovation, and competition.
• The Insurance Amendment Bill 2025 addresses both consumer rights and industry growth.

Here Are 7 Key Changes

1. 100% Foreign Direct Investment in Insurance

• One of the most headline-grabbing changes is the decision to allow up to 100% Foreign Direct Investment (FDI) in insurance companies.
• Earlier, foreign ownership was capped at 74%.
• With the new law, foreign insurers can fully own Indian insurance companies, removing the need for joint venture partners.
• According to Finance Minister Nirmala Sitharaman higher FDI will increase competition, attract global best practices, and eventually lead to better products and lower premiums for customers.

2. Mandatory Accurate and Verified Policyholder Records

• The Bill makes it compulsory for insurers to maintain highly detailed and verified personal records of policyholders.
• This includes name, date of birth, address, Aadhaar or PAN, nomination details, and policy transfers.
• This change aims to reduce claim rejections caused by data errors, a common grievance among insurance customers.

3. Right to Data Accuracy and Security

• A major consumer bfriendly reform is shifting the burden of proof onto insurers.
• Companies must now ensure that customer data is accurate, complete, updated, and secure.
• If incorrect or outdated information leads to claim disputes, insurers can no longer blame customers easily.
• This strengthens trust and accountability in the system.

4. Strong Privacy Protection and Limits on Data Sharing

The Bill introduces strict restrictions on sharing policyholder data, especially Know Your Customer (KYC) information.

Insurers are now explicitly barred from selling or sharing customer data with third parties, except in three situations,

• When disclosure is required by law
• When disclosure is in public interest
• When the customer gives explicit consent

This provision significantly strengthens privacy rights and protects customers from misuse of personal data.

5. Transparency in Claim Rejections

Under the new law insurers must maintain clear records of every claim, including,

• Date of settlement
• Date of rejection
• Exact reasons for rejection

This reform empowers customers by ensuring that claim decisions are traceable, documented, and challengeable, reducing arbitrary denials.

6. Push for Digital Insurance Policies

The Bill mandates insurers to issue and maintain policies and claim records in electronic form wherever possible.

For customers, this means,

• Easier access to policy documents
• Faster tracking of claims
• Reduced dependency on physical paperwork

This aligns with India’s broader Digital India push and improves convenience, especially for younger and tech-savvy policyholders.

7. Stricter Penalties for Rule Violations

To ensure compliance, the Bill introduces tough financial penalties for insurers and intermediaries who violate regulations.

Key penalties include,

• Up to ₹1 lakh per day, capped at ₹10 crore, for ongoing non-compliance
• Up to ₹1 crore fine for unregistered insurance intermediaries
• These penalties strengthen the enforcement powers of Insurance Regulatory and Development Authority of India (IRDAI).