Foreign investment in insurance sector

The Department of Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India has revised the terms governing foreign direct investment (“FDI”) policy of 2020 (“FDI Policy”) for the insurance sector in India, vide Press Note No. 1 of 2026 dated 9 February 2026 (“Press Note 2026”).

1. FDI in the insurance sector was permitted in 2000. Thereafter, the limits and conditions relating thereto have been further liberalized over the years with the last amendment being made vide Press Note No. 1 of 2022 (“Press Note 2022”).

2. Press Note 2022 permitted FDI under the automatic route (a) up to 74% for insurance companies, and (b) up to 100% for insurance intermediaries. The Press Note 2026 has now permitted 100% FDI in insurance companies as well under the automatic route.

3. Further, Press Note 2022 allowed FDI up to 100% in insurance intermediaries, including insurance brokers, re-insurance brokers, insurance consultants, corporate agents, third-party administrators, surveyors and loss assessors and such other entities, as may be notified by the Insurance Regulatory and Development Authority of India (“IRDAI”). The Press Note 2026 has now introduced ‘managing general agents’ and ‘insurance repositories’ to the term “insurance intermediaries”.  

While the term ‘managing general agents’ has not been defined, a managing agent can be understood as an agent acting on behalf of insurers, underwriting policies and managing claims. As per the guidelines issued by the IRDAI, an “insurance repository” is a company or any other entity certified by the IRDAI to store digital insurance policies on behalf of insurers and to undertake changes, modifications and revisions in such policies as directed by the insurers.

4. The governance requirements for insurance companies have been relaxed. Earlier, the FDI Policy required that the ownership and control of the insurance company, including (a) majority of the directors, (b) majority of the key managerial personnel, and (c) at least one  person amongst the chairperson of its board of directors, its managing director or chief  executive officer, to be resident Indian citizens. The Press Note 2026 has relaxed the governance requirement to retain only the latter, i.e. at least one person amongst the chairperson, managing director or chief executive officer of the insurance company must be a resident Indian citizen.

5. The FDI Policy required that:  

(a) the composition of the board of directors and key management persons of intermediaries or insurance intermediaries be as specified by the concerned regulator from time to time.

(b) insurance intermediaries having majority shareholding of foreign investors: 

i. prior permission of the IRDAI for repatriation of dividends.

ii. not make payments to the foreign group or promoter or subsidiary or interconnected or associate entities beyond what is necessary or permitted by the IRDAI.

The above requirements have been done away with vide Press Note 2026.

The Press Note 2026 demonstrates the government of India’s commitment to liberalising FDI in the insurance sector by permitting 100% investment in insurance companies and expanding the scope of intermediaries. This should be read with the enactment of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, which seeks to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the Insurance Regulatory and Development Authority Act, 1999 in order to deepen insurance coverage, provide ease of doing business and improve regulatory oversight and governance. These measures collectively are expected to attract foreign capital, simplify governance and enhance operational efficiency in the insurance sector.

About the authors: Vaishakh Kapadia is a Partner and Malini Mukherjee is a Associates at ALMT Legal.

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