Yesterday was a historic day for the Indian financial sector.
On December 17, 2025, the Rajya Sabha passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025. This changes everything.
For decades, foreign insurers like Allianz, AIG, and Prudential had to find a local Indian partner to enter the market. They were capped at 26%, then 49%, and finally 74%.
As of this week, the cap is gone. Foreign Direct Investment (FDI) in insurance is now allowed up to 100%.
If you represent a global insurance firm, you no longer need a Joint Venture partner. You can own, control, and operate your Indian subsidiary 100%.
Here is the Chartered Accountant’s guide to navigating this new landscape.
The New Rules: What Changed Yesterday?
The headline is “100% FDI,” but the fine print is where the real opportunities (and risks) lie.
1. No Indian Partner Required
Previously, even with 74% ownership, you needed an Indian partner to hold the remaining 26%. Now, a US or European insurer can incorporate a 100% wholly-owned subsidiary in India. This solves the biggest headache: “Control and Conflict” between partners.
2. Reinsurance Entry Barrier Lowered
This is massive for global reinsurers (like Swiss Re or Munich Re).
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Old Rule: You needed ₹5,000 Crore in Net Owned Funds (NOF) to open a branch.
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New Rule: This has been slashed to ₹1,000 Crore.
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Impact: Mid-sized global reinsurers can now enter India easily.
3. One-Time Registration for Intermediaries
If you are an Insurance Broker or a TPA (Third Party Administrator), you no longer need to renew your license every 3 years. The new bill introduces permanent registration, drastically reducing your compliance burden.
The “Hidden” Conditions (Read Carefully)
While the door is open, the Insurance Regulatory and Development Authority of India (IRDAI) has kept strict checks. As your CA, I must warn you about these two non-negotiable clauses:
The “Resident Indian” Rule
Even if you own 100% of the company, the Management Control must stay local.7
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The CEO, Managing Director, or Chairperson must be a Resident Indian Citizen.
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You cannot run the India office entirely from London or New York. You need credible local leadership on the ground.
Solvency Margins
India is strict on financial health. You must maintain a Solvency Ratio of 150% at all times. This means your assets must be 1.5 times your liabilities. If this dips, the IRDAI will step in immediately.
Minimum Capital Requirements (2025)
The bill did not reduce the capital entry barriers for primary insurers. You still need deep pockets to enter.
| Type of Entity | Minimum Paid-Up Capital (INR) | Approx USD (Millions) |
| Life Insurance | ₹100 Crore | ~$12 Million |
| General Insurance | ₹100 Crore | ~$12 Million |
| Health Insurance | ₹100 Crore | ~$12 Million |
| Reinsurer | ₹200 Crore | ~$24 Million |
The 3-Stage Registration Process (IRDAI)
Setting up an insurance company is harder than a standard IT company. It follows a rigorous R1, R2, R3 process.10
Stage 1: R1 (Requisition for Registration)
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Action: We submit your business plan, 5-year projections, and promoter details to the IRDAI.
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The Test: The regulator checks your “Fit and Proper” status. They want to know the parent company’s track record in its home country.
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Fee: Non-refundable processing fee (approx ₹5 Lakhs).
Stage 2: R2 (Application for Registration)
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Action: Once R1 is approved, you incorporate the Indian company and infuse the capital.
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The Proof: We must show the bank statement proving that the ₹100 Crore (equity capital) has hit the Indian bank account.
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Compliance: We file affidavits ensuring the CEO is a Resident Indian.
Stage 3: R3 (Certificate of Registration)
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Action: The IRDAI inspects your IT systems, office infrastructure, and key management team.
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The Result: If satisfied, they issue the Certificate of Registration (CoR).13 You can now start selling policies.
Why Enter India Now? (The Business Case)
Why go through all this trouble?
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Under-Penetration: India’s insurance penetration is still around 4% of GDP (Global average is 7%). There is massive room for growth.
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The “Middle Class” Boom: 500 million Indians are entering the middle class. They are buying cars, houses, and health plans.
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Tax Efficiency: New manufacturing and service companies can enjoy a corporate tax rate of 25%, which is competitive globally.
How We Help
At KRPR & Associates, we specialize in this specific setup.
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Market Entry Strategy: We help you structure the 100% subsidiary.
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IRDAI Liaison: We handle the R1/R2/R3 paperwork so your legal team doesn’t have to fly back and forth.
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Resident Director Services: We help you find compliant local directors to meet the residency norm.
Ready to launch? The market is open.