Bill proposing 100% FDI in insurance may be tabled this winter session
The Indian government is likely to introduce a bill in the upcoming winter session of Parliament to raise the foreign direct investment (FDI) limit in the insurance sector from the current 74% to 100%. According to senior officials, the Department of Financial Services has been working closely with other ministries to finalise the draft legislation aimed at liberalising the capital structure of insurance companies.
This proposal is seen as part of broader reforms to enhance the depth of the Indian insurance market, attract global capital, and improve insurance penetration across the country. Sources say that while the plan was initially shelved due to political and sectoral concerns, renewed interest from global players and the need to boost long-term capital availability has brought it back into focus.
If cleared, the move will allow full foreign ownership of Indian insurance companies, significantly altering the competitive and investment landscape. Industry stakeholders are watching closely, given its wide-ranging implications for governance, operations, and regulatory oversight.
IRDAI moves to ease insurer-hospital friction over payments, packages
In a significant step to streamline health insurance operations, the Insurance Regulatory and Development Authority of India (IRDAI) has initiated discussions with insurance companies and hospitals to address longstanding issues regarding package rates, delays in payments, and inconsistencies in the cashless claims process.
The IRDAI is forming a committee comprising representatives from both insurers and healthcare providers. This committee will work toward standardizing procedures, including pre-authorisation protocols, discharge timelines, and grievance redressal mechanisms. The regulator aims to ensure smoother hospital experiences for policyholders while safeguarding insurer interests.
Stakeholders have highlighted key friction points such as non-uniform package rates across hospitals, ambiguous inclusions in treatment costs, and delays in payments that affect trust and operations. The new IRDAI effort also seeks to expand the ambit of cashless services beyond urban centres by onboarding more hospitals in Tier II and Tier III cities.
The move comes amid rising complaints from policyholders and a growing need to ensure consistency in health insurance delivery and claim servicing.
IRDAI to engage with CII, FICCI to streamline insurance claim timelines
The Insurance Regulatory and Development Authority of India (IRDAI) is planning to initiate structured consultations with key industry bodies like the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) to address challenges in claim settlement timelines. This move is aimed at enhancing customer experience and improving overall efficiency in the insurance sector.
The regulator is expected to gather feedback from insurers, hospitals, and consumer groups to identify bottlenecks in the current claims process. The consultation may focus on adopting a technology-first approach, setting time-bound resolution benchmarks, and encouraging insurers to simplify documentation and processing workflows.
IRDAI Chairman Debasish Panda has previously emphasised the need to reduce delays in claim processing, particularly in health insurance, where discharge-related hold-ups and lack of standardisation remain major concerns. The consultations with CII and FICCI are likely to lead to broader industry reforms and revised timelines that will be binding on insurers.
The proposed measures align with IRDAI’s larger agenda of making insurance more policyholder-centric and efficient.
IRDAI Chief urges private insurers to drive innovation, emulate govt schemes
IRDAI Chairman Debasish Panda has called upon private sector insurers to bring greater innovation and inclusivity in their product offerings, using successful government schemes as inspiration. Addressing the media recently, Panda highlighted how initiatives like Ayushman Bharat and PMFBY (Pradhan Mantri Fasal Bima Yojana) have had wide-ranging impact, providing affordable protection to millions.
He noted that the insurance sector must not solely focus on profitability but also on social relevance. “We need to innovate for the bottom of the pyramid and ensure insurance reaches the last mile,” Panda said, urging private players to bridge the protection gap through customised, low-cost, tech-enabled products.
He also cited the example of how PMFBY leveraged satellite data and digitised land records to ensure faster claims for farmers — a model private companies could adopt for health, life, and general insurance. The IRDAI chief’s remarks align with the regulator’s broader push for ‘Insurance for All by 2047’, aimed at expanding coverage and trust in the insurance ecosystem.
IRDAI imposes Rs. 1 crore penalty on Liberty General Insurance
The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a monetary penalty of Rs. 1 crore on Liberty General Insurance for multiple regulatory violations. According to the order issued by the regulator, the insurer breached norms related to outsourcing practices, payment of commissions and rewards to intermediaries, and compliance with policyholder protection guidelines.
IRDAI noted that the violations reflected gaps in the company’s internal controls and adherence to regulatory directions. The regulator has also issued a caution to the insurer, advising stricter compliance going forward. “In view of the above, in exercise of powers under Section 102 of the Insurance Act, 1938, the Authority hereby imposes a penalty of Rs. 1 crore for the violation of the provisions of regulations,” the order stated.
The penalty underscores the regulator’s stronger enforcement stance at a time when the insurance sector is undergoing rapid digitalisation and increased scrutiny on distributor practices. IRDAI has repeatedly emphasised that insurers must prioritise transparency, fair conduct, and strict adherence to remuneration norms to protect policyholders’ interests.
Industry observers said recent enforcement actions reflect IRDAI’s broader effort to strengthen governance standards and ensure uniform compliance across insurers.
IRDAI chief says policyholders’ voices must shape future regulations
IRDAI chairman Ajay Seth has stressed the need to incorporate policyholders’ perspectives more meaningfully when framing insurance regulations. Speaking at the ‘Gatekeepers of Governance’ conference in Mumbai, Seth said that while industry views are strongly represented, public expectations do not receive similar structured attention during the rule-making process.
“A significant regulatory gap is the absence of the policyholder’s voice at the stage of regulation-making,” he said, urging the creation of a more formal mechanism to capture consumer inputs. Seth also highlighted the challenge posed by unregulated health service providers, calling it a key area requiring policy focus.
He emphasised that inter-regulatory coordination has become essential as digitalisation increases overlaps between financial-sector laws. Coordinated oversight, he said, will help address regulatory gaps, strengthen financial stability, and promote financial inclusion.
Seth added that the insurance sector must evolve to balance innovation with consumer protection. “As regulations for one sector increasingly impact others, close coordination between regulators becomes vital,” he said.
Industry participants noted that Seth’s remarks reflect IRDAI’s shift toward a more consumer-centric regulatory approach as insurance penetration expands nationwide.
IRDAI flags gaps in health insurance claim settlement; urges fairness and transparency
The Insurance Regulatory and Development Authority of India (IRDAI) is reviewing inconsistencies in health insurance claim settlements, with chairman Ajay Seth noting that although the number of settled claims is high, the proportion of fully settled claim amounts often falls short of expectations.
Speaking at BimaLokpal Day, Seth said insurers must ensure prompt, fair, and transparent claim processing, as gaps in settlement practices weaken policyholder trust. “In health insurance, we continue to see gaps — while the number of claims settled is high, the amount settled, especially in full, is sometimes lower than expected. This is an area we are monitoring closely,” he said.
During FY25, general and health insurers settled 3.26 crore health claims amounting to Rs. 94,247 crore. Across the industry, total claim payments stood at Rs. 8.36 trillion, against total premium collections of Rs. 11.93 trillion. Yet, Seth warned that penetration remains low, particularly in rural areas, the informal sector, and among women.
He added that IRDAI is pushing for wider digital access, simpler communication, and more inclusive product design to accelerate progress toward the goal of “Insurance for All by 2047.”
GST cut is growth enabler for insurers: IRDAI Chairman Ajay Seth
IRDAI Chairman Ajay Seth has emphasised that a reduction in GST rates on insurance premiums would significantly enhance insurance penetration in India. Speaking at the Global Insurance Summit 2025, Seth said the move would act as a catalyst for growth in the insurance sector, particularly in rural and underserved segments.
“Reduction in GST will reduce the burden on policyholders and encourage more people to buy insurance, especially the young and first-time buyers,” said Seth. Currently, life and health insurance products attract GST at 18% and 12%, respectively, which is seen as a deterrent for mass-market adoption.
Seth added that discussions with the finance ministry are ongoing, and the IRDAI is hopeful that GST rationalisation will be considered favourably in the upcoming budget. He also highlighted that the regulator is pursuing reforms to simplify products and processes, promote inclusive insurance, and bring insurers closer to the goal of “Insurance for All by 2047.”
Industry stakeholders echoed Seth’s views, calling the tax cut a much-needed reform.
India explores nationwide climate-linked insurance scheme
The Indian government has begun preliminary discussions with domestic insurers on creating a nationwide climate-linked insurance programme that would provide rapid payouts after extreme weather events. The proposed model would rely on parametric insurance, in which predetermined payouts are triggered when measurable thresholds—such as rainfall, temperature or windspeed—are breached.
If implemented, India could become one of the first major economies to launch such a large-scale climate-parametric programme. The move is aimed at improving financial resilience in one of the world’s most climate-vulnerable countries, while also easing fiscal pressure on the government, which currently uses disaster relief funds to support states after severe weather events.
“We’ve seen the frequency and severity of adverse climate events go up, and based on that, this discussion with the government also started,” said Ramaswamy Narayanan, chairperson of state-run reinsurer GIC Re.
Parametric insurance is growing globally because it enables faster claims settlement compared to traditional loss-assessment methods, which can take months or years. Experts say it can also extend protection to regions and sectors where conventional insurance penetration remains low.
