India’s insurance sector is preparing for a potentially defining moment as the Government moves to introduce the Insurance Laws (Amendment) Bill, 2025 in the Winter Session starting today. The proposed reforms include a landmark increase in the foreign direct investment (FDI) limit from 74 percent to 100 percent, reduced capital requirements, and the introduction of composite licences. Together, these measures aim to usher in the next wave of sectoral growth, capital inflows and market innovation.
Against this backdrop, RiskAwareness.in spoke with Dr. Ravi Seshadri T., Strategic Advisor – Insurance & Insurtech (APAC and MENA), and an insurance professional with over four decades of industry experience. His views offer a grounded and practical perspective on what the industry can expect as India prepares for this long-awaited legislative overhaul.
1. Impact of Higher FDI and Easier Entry Norms
Question: The draft Bill proposes raising foreign direct investment (FDI) in insurance to 100%, reducing capital thresholds, and enabling composite licences all intended to deepen penetration and attract capital. In your view, how will increase foreign ownership and easier entry norms impact the competitiveness, capital strength and risk appetite of Indian insurers and will this lead to meaningful benefit for retail and SME segments?
Dr. Ravi Seshadri: It’s an excellent initiative by the Ministry. The proposed increased FDI limits will bring in, not only capital to the fast-growing economy, but also advanced underwriting expertise to the ever-dynamic risk environment. This will also enable innovations in insurance products with the global experience of foreign players. More competition will enable affordable insurance solutions and easy reach of the untapped potential in the market. The easier entry norms through capital requirements will allow more players which will help achieve insurance for all in the country. It is going to be a great boon for retail and SME sectors, considering the correct pricing of risks with specifically designed products for this segment. We will observe specific parametric covers designed for small-scale manufacturers in an industrial locality, without much paperwork and process.
2. Composite Licences and Convergence of Financial Services
Question: The Bill reportedly allows insurers broader latitude: composite licences across life, general and health, and possibly diversified financial-product offerings beyond insurance. Do you expect this convergence of financial services where insurers offer multiple products alongside traditional insurance to strengthen or complicate risk management for companies and regulators?
Dr. Ravi Seshadri: The convergence of multiple financial products alongside insurance is going to benefit everyone, as the distribution network is widened and reach becomes easier. Customers will also have the opportunity for a one-stop shop for all. The revenues of insurers will drastically increase as they have a wider network. However, strong training is essential for employees as many are not used to these financial products.
3. Safeguards Needed for Consumer Protection and Underwriting Discipline
Question: Market observers point out that despite reform intent, core challenges remain data gaps, low insurance penetration, distribution limitations and regulatory uncertainty. What structural or regulatory safeguards should be prioritised by policymakers to ensure that expansion under the Amendment Bill does not compromise underwriting discipline, product quality or consumer protection?
Dr. Ravi Seshadri: Given the present situation of regulatory requirement in insurance, it is strong enough to protect policyholders’ interests. The only exception is mis-selling by unscrupulous elements in the distribution network. There should be strong action by the regulator on these, and there should be clear definitions of complaints and review of grievance resolution by the Authority. The concept of internal ombudsman can resolve issues faster.
4. Preparing for New Entrants and an Evolving Risk Landscape
Question: Given that the Bill could accelerate entry of new and niche players (insurtechs, micro-insurers, speciality-risk outfits), the risk landscape may evolve rapidly. How should legacy insurers, reinsurers and regulators adapt in terms of capital models, data analytics, and risk-transfer mechanisms to manage heightened volatility and avoid systemic vulnerabilities?
Dr. Ravi Seshadri: Legacy insurers need to update their skills in underwriting and claims and learn to be fast, friendly and fair. Artificial intelligence tools can help in risk acceptance and pricing without bias. As the market is growing fast and dynamic, they need to be familiar with international practices. Huge investment in technology and learning and development is necessary to cope with foreign players.
A Sector on the Verge of Strategic Transformation
As the sector awaits the formal tabling of the Insurance Amendment Bill in the winter session, industry sentiment is a blend of optimism and caution. The upcoming reforms are expected to redefine competitive dynamics, capital structures and the scope of insurance innovation in India. For insurers, reinsurers, distributors and emerging insurtech players, the next few months will be critical in interpreting both the intent and the operational impact of the proposed changes. The stakes are significant because the Bill is not merely a regulatory update; it has the potential to reset the long-term architecture of India’s insurance ecosystem. Our conversation with one of the industry’s seasoned leaders aims to provide clarity on what the sector should realistically prepare for as the reform cycle enters its next phase.
