The Insurance Amendment Bill (2025
Tabled in the Lok Sabha, this landmark bill proposes hiking the Foreign Direct Investment (FDI) cap to 100% from 74% and
empowers the IRDAI to regulate commission limits more dynamically.
For years, the 74% FDI cap acted as a "psychological ceiling" for global giants. Moving to 100% FDI is a game-changer because it allows global insurers (such as Allianz,Prudential, or AXA) to operate wholly owned subsidiaries, removing the friction of finding and often subsidizing a domestic partner.
Simultaneously, granting IRDAI powers over commissions reflects a shift toward "Expense of Management" (EoM) efficiency. By capping commissions, the regulator aims to lower the cost for policyholders while curbing mis-selling. Think of it as moving from a "push" model (where agents sell for high commissions) to a "pull" model (where products are affordable
enough that customers actively seek them out).
The removal of the FDI cap is expected to unlock a fresh wave of capital, potentially exceeding the ₹82,000 crore already infused into the sector.
The reduction in Net Owned Fund (NOF) requirements for foreign reinsurers from ₹5,000 crore to ₹1,000 crore will further deepen the market, lower premiums for complex risks, and challenge the dominance of GIC Re.
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