New Delhi, May 2: The central government has officially notified 100% foreign direct investment (FDI) in the insurance sector under the ‘automatic route’, as reported on Saturday. This move paves the way for increased participation from foreign investors.
Foreign investments in insurance companies will be subject to compliance with the provisions of the Insurance Act of 1938 and will require mandatory approval from the Insurance Regulatory and Development Authority of India (IRDAI) for conducting insurance and related activities.
The report states, “However, the Life Insurance Corporation of India (LIC) will continue to operate under a separate framework, where foreign investment will be capped at 20% under the automatic route.” It also noted that investments in LIC will remain governed by the applicable provisions of the Insurance Act and the Life Insurance Corporation Act of 1956.
The notification stipulates that at least one of the following positions—Chairman, Managing Director, or Chief Executive Officer—of insurance companies with foreign investments must be held by an Indian citizen and resident.
Additionally, insurance intermediaries, including brokers, reinsurance brokers, insurance consultants, corporate agents, third-party administrators, surveyors, loss assessors, managing general agents, and insurance repositories, are now allowed 100% FDI under the automatic route, as periodically notified by the IRDAI.
This step follows earlier measures taken by the central government to liberalize the sector. In February, the Department for Promotion of Industry and Internal Trade issued a notification allowing 100% FDI in the insurance sector, aligning with legislative changes approved by Parliament in December 2025.
Amendments introduced through the ‘Sabka Bima Sabki Raksha (Amendment to Insurance Laws) Act’ revised key provisions of the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the Insurance Regulatory and Development Authority Act of 1999, aimed at enhancing capital flow and expanding insurance access in the country.
The latest notification formalizes this framework, marking a step towards opening the insurance sector while maintaining safeguards for domestic oversight and regulation.
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