In a landmark move for the financial sector, the Indian Parliament on Wednesday, December 17, 2025, passed a crucial bill permitting 100% Foreign Direct Investment (FDI) in the insurance industry. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, which was cleared by the Lok Sabha a day earlier, received approval from the Rajya Sabha, effectively removing the previous cap that limited foreign investment to 74%.
A Watershed Moment for Insurance Penetration
Financial experts have hailed this legislative change as a significant positive step that can inject substantial capabilities and long-term capital into the sector. The move is expected to address the chronic issue of under-penetration of insurance in India. Jayant Walia, a Chartered Accountant, Harvard Business School MBA, and Senior Director of Business Development at Gainbridge, provided key insights into the challenges and opportunities that lie ahead.
Walia pointed out that a primary reason for low insurance adoption is that products are often "sold rather than bought," especially complex, long-term plans. The underlying hurdles, he noted, are trust and friction. Customers remain wary about cumbersome documentation and the eventual claims process. The future opportunity, therefore, lies in transforming insurance from a high-pressure sales interaction into a trusted, contextual product that integrates seamlessly into a customer's financial life.
Building a Robust Insurance Ecosystem
To truly improve the insurance market, Walia emphasized a three-pronged approach focusing on the complete customer journey.
First, design for the full lifecycle. The real value of an insurance product is not just the sale but the servicing and the claim settlement. Building transparent processes and ensuring predictable, fast claims will foster trust and drive deeper market penetration.
Second, connect insurance to holistic financial well-being. Protection should not exist in a silo. It must be part of a broader plan that includes savings and retirement, delivered in a manner relevant to an individual's life stage. Technology can play a pivotal role here by enabling simpler explanations and efficient servicing.
Third, reduce friction through data sharing. Implementing regulated, consent-based data sharing frameworks, similar to open banking standards, can dramatically speed up processes like onboarding, underwriting, and claims while maintaining robust consumer protection.
Regulatory Reforms Paving the Way for Growth
Walia commended India's regulatory approach, which seeks to balance innovation with consumer safety. The recent FDI reform is seen as a major accelerator, capable of attracting more investment and expertise. Another critical area is data and interoperability. Establishing reliable, consent-driven data pipelines can fuel the creation of better, more personalized insurance products.
Furthermore, he highlighted the need to expand access to regulated, fiduciary-style financial advice for the mass market. Better advisory models can improve overall financial health, naturally leading to higher adoption of essential protection and retirement planning products.
Key Pillars for Effective Retirement Planning
In the context of long-term financial security, Walia outlined crucial considerations for retirement planning:
- Account for longevity and inflation: Plans must consider the risk of outliving savings and the eroding effect of inflation, with healthcare costs being a significant variable.
- Focus on consistent execution: Success depends on regular contributions, realistic assumptions, and maintaining a disciplined asset allocation through market cycles.
- Use national structures intelligently: For those utilizing EPF and NPS, it's important to consider the overall debt exposure in the portfolio, as EPF already provides a fixed-income component.
The goal, he concluded, is not to chase maximum returns but to build a resilient plan that can withstand life's uncertainties and compound wealth over decades.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert. Investors are advised to consult certified experts before making any investment decisions.
