The Sabka Bima Sabki Raksha Act 2025

The changes that open the market

Composite registration. Clause 9(a) amended section 6A(1) to replace "life insurance business or general insurance business or health insurance business or re-insurance business" with the single expression "insurance business". That removes from the Act the segregation of classes that had stood since 1938.

A definition to match. Clause 3 inserted section 2(6D), defining "insurance business" as the business of effecting insurance contracts and including any other form of contract notified by the Central Government in consultation with the Authority; and its Explanation defines an "insurance contract" for that clause, the first statutory definition of one in Indian law.

Foreign reinsurers. Clause 4 rewrote section 2C(1)(c) to admit a company or body incorporated outside India and engaged in reinsurance business that establishes an Indian branch for reinsurance business exclusively, expressly including Lloyd's established under the Lloyd's Act, 1871 and any of its Members; and clause 8 substituted section 6(2), requiring such an insurer to have a net owned fund of not less than one thousand crore rupees.

The premium defined. Clause 3 also inserted section 2(13BC), defining "premium" as the amount paid or payable as consideration to the insurer by the policyholder for a contract of insurance.

The changes that modernise supervision

Registration. Clause 6 substituted section 3(2) and (2A), moving the application requirements into the regulations and stating the four matters of which the Authority must be satisfied; and substituted the National Company Law Tribunal for the Court in section 3(5D).

Investment. Clause 21 omitted sections 27A, 27B, 27C and 27D outright, and clauses 22, 60 and 67 removed the consequential references, leaving section 27 as the investment provision and the detail to the regulations.

Accounts and the actuary. Clause 13 inserted section 12A, the appointed Actuary; clause 14 amended section 13; clauses 15 and 16 substituted sections 14 and 15, the record of policies and claims and the submission of returns; and clause 20 substituted section 27.

Policyholder data. Clause 15 also inserted sections 14A, 14B and 14C, on the processing of Know Your Customer information, its accuracy and security, and its confidentiality with only three exceptions. Clause 91 inserted the corresponding sections 14A to 14E of the Act of 1999, giving the Authority power to collect and furnish policy information, overriding secrecy obligations.

Distribution. Clause 40 amended section 42D, and clause 61 inserted section 105BA, a penalty of one to ten lakh rupees on an unregistered intermediary and of ten lakh to one crore on whoever appoints or transacts through one.

Penalties. Clause 63 inserted section 105E, the factors to be weighed before imposing any penalty under either Act, including the action taken to mitigate; and clause 90 substituted clause (n) of section 14(2) of the Act of 1999.

Rule making. Clause 69 inserted sections 114B and 114C, subsidiary instructions and Consultative Committees; clause 70 omitted section 115; clause 71 substituted section 116, requiring an order in the Gazette with reasons recorded; clauses 73 and 75 substituted sections 117 and 119; and clause 76 omitted section 120.

The changes to the other two Acts

Chapter III, the Life Insurance Corporation Act, 1956. Clause 78 amended section 6A; clause 79 amended section 19; clause 83 added to section 30A the words "as applicable to the Corporation by virtue of section 43 of the Life Insurance Corporation Act, 1956", making explicit how the Insurance Act reaches the Corporation; and clauses 77 to 86 make the other amendments.

Chapter IV, the Insurance Regulatory and Development Authority Act, 1999. Clause 87 amended section 2. Clause 88 added information technology to the disciplines from which members may be drawn under section 4. Clause 89 substituted section 5(1), giving the Chairperson and whole time members a term of five years or until the age of sixty five, whichever is earlier, with eligibility for reappointment, and removing the earlier rule under which whole time members retired at sixty two. Clause 90 amended section 14(2). Clause 91 inserted sections 14A to 14E. Clause 93 inserted section 16A, the Policyholders' Education and Protection Fund. Clauses 94 and 95 substituted sub section (1) of sections 23 and 26.

What to say about it in an answer

And the assessment, which is what an LL.M. answer is marked on. The Act removes the last structural restrictions on ownership and on the classes an insurer may write, and it modernises the supervisory and data provisions. What it does not do is address the reason Indian insurance penetration is low, which is distribution economics and the price of protection relative to income. Twenty five years of relaxing the cap did not move penetration; a candidate who says so is assessing the Act rather than reciting it.

A worked example

A student in an examination is asked to state the law on the maximum foreign shareholding in an Indian insurer, on composite registration, and on the term of a whole time member of the Authority.

A textbook printed in 2024 gives seventy four per cent, no composite registration, and sixty two years. All three are now wrong.

India Code gives section 3AA as a heading with no text, section 6A(1) in its pre 2026 form, and, on the Act of 1999, the correct new section 5(1). Two of the three would still be wrong, because India Code applied the amendments to the Act of 1999 and to section 2 of the Act of 1938, and not the rest.

The Authority's own consolidation, headed as on 15 April 2026, gives all three correctly. That is why this book is written from it, and why the point is recorded in the front matter of every chapter that quotes a changed provision.

What it does NOT mean

It does not mean there is a new insurance statute. The Act of 2025 is an amending Act; the principal statutes remain the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the Insurance Regulatory and Development Authority Act, 1999.

It does not mean composite insurers now exist. Section 6A(1) has been amended to permit them; registration is for the Authority under section 3.

It does not mean foreign ownership is automatic. Section 3AA is subject to conditions and a manner to be prescribed, and the rule making power for them is section 114(2)(aaa).

And it does not mean everything in the Act is in force. Section 1(2) left the date to notification, and the notification of 5 February 2026 is what brought the provisions into force; the currency of any particular section should be checked against its own footnote.

Quick revision

Act 40 of 2025. Assent 20 December 2025; in force 5 February 2026. An amending Act in four Chapters: preliminary; the Insurance Act, 1938; the Life Insurance Corporation Act, 1956; the Insurance Regulatory and Development Authority Act, 1999.

The central change: new section 3AA, foreign holdings including portfolio investors up to one hundred per cent, subject to prescribed conditions; rule making power in section 114(2)(aaa).

Structural changes: section 6A(1) now reads "insurance business", enabling composite registration; section 2(6D) defines insurance business and, in its Explanation, an insurance contract; section 2(13BC) defines premium; section 2C(1)(c) admits a foreign reinsurer's branch including Lloyd's, with a net owned fund of Rs. 1,000 crore under section 6(2).

Supervisory changes: section 3(2) and (2A) substituted; sections 27A to 27D omitted; section 12A, the appointed Actuary; sections 13, 14, 15 and 27 rewritten; sections 14A to 14C on policyholder data; sections 105BA and 105E on penalties; sections 114B and 114C, subsidiary instructions; section 116 substituted.

In the Act of 1999: information technology added to section 4; section 5(1) substituted, five years or age sixty five with reappointment; sections 14A to 14E, policy information; section 16A, the Policyholders' Education and Protection Fund.

The assessment: it removes the last restrictions on ownership and class, and modernises supervision and data. It does not address distribution economics, which is where low penetration actually comes from.

Test yourself

1. What is the full name of the Act, its number, and the two dates? The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, Act 40 of 2025. Assent 20 December 2025; brought into force 5 February 2026.

2. Which three statutes does it amend, and in which Chapters? The Insurance Act, 1938 in Chapter II; the Life Insurance Corporation Act, 1956 in Chapter III; and the Insurance Regulatory and Development Authority Act, 1999 in Chapter IV.

3. What is its central provision? Section 3AA of the Insurance Act, 1938, under which the aggregate holdings of equity shares by foreign investors including portfolio investors in an Indian insurance company may extend up to one hundred per cent of the paid up equity capital, subject to prescribed conditions and manner.

4. Which amendment enables composite registration? The amendment of section 6A(1), replacing "life insurance business or general insurance business or health insurance business or re-insurance business" with the single expression "insurance business".

5. Name three wholly new sections it inserted into the Insurance Act, 1938. Section 3AA, foreign investment in equity; section 12A, appointment of an Actuary; sections 14A to 14C, the processing, accuracy and confidentiality of policyholder information; sections 105BA and 105E on penalties; and sections 114B and 114C, subsidiary instructions and Consultative Committees.

6. What did it change in the Act of 1999 about the members' tenure? Section 5(1) as substituted gives the Chairperson and whole time members five years or until the age of sixty five, whichever is earlier, with eligibility for reappointment, removing the earlier distinction under which whole time members retired at sixty two.

7. Why must a student be careful about the source of the text? Because India Code has applied only sections 2, 3 and 4 of the amending Act to its copy of the Insurance Act, 1938, so several new sections there carry a heading and no text and several amended sections still print the old words. The Authority's own consolidation as on 15 April 2026 carries the whole Act.