Introduction
The Insurance Regulatory and Development Authority of India (IRDAI) has set up a seven-member committee to review and recommend changes to the Insurance Act, 1938. This move aligns with the government’s broader reforms in the insurance sector, including a proposal to allow 100% foreign direct investment (FDI).
Key Highlights
Committee Formation and Objectives
The newly formed committee, chaired by former State Bank of India chairman Dinesh Khara, aims to assess existing regulatory provisions and suggest amendments. The committee has already conducted its first meeting to discuss potential changes.
Committee Members
The panel comprises experienced professionals from banking, insurance, and legal sectors, including:
- NS Kannan – Former MD & CEO, ICICI Prudential Life Insurance
- Girish Radhakrishnan – Former CMD, United India Insurance
- Rakesh Joshi – Former IRDAI Member
- Saurabh Sinha – Former Executive Director, RBI
- Alok Misra – MD & CEO, MFIN
- L. Vishwanathan – Legal Expert
Proposed Amendments to the Insurance Act
Originally enacted in 1938, the Insurance Act serves as the legal foundation for India’s insurance industry. The proposed amendments aim to modernize regulatory oversight by revising capital norms, licensing requirements, and compliance standards.
100% FDI Proposal in Insurance
Finance Minister Nirmala Sitharaman, in her budget speech for FY26, reaffirmed the government’s intent to raise the FDI limit from 74% to 100%. This relaxation is expected to attract higher foreign investment while ensuring that insurers reinvest premiums within India. The government also plans to simplify existing regulatory conditions for foreign investors.
Government’s Reform Roadmap
M Nagaraju, Secretary for Financial Services at the Ministry of Finance, stated that internal discussions on these amendments have concluded. Key areas of focus include:
- Composite licensing for insurers
- Differential capital requirements
- Changes to solvency norms
- Introduction of captive insurers
- Revised investment policies
- Simplified registration for intermediaries
- Expansion of insurance product offerings
Conclusion
The IRDAI’s latest initiative marks a significant step towards regulatory modernization in India’s insurance sector. If approved, the proposed changes could enhance foreign participation, boost investment inflows, and improve insurance penetration across the country.
