SBI Life and 3 other stocks to benefit from the new insurance bill to keep on your radar

SYNOPSIS: Insurance Amendment Bill 2025 lifts FDI limits, eases regulation and boosts reinsurance, aiding sector growth; HDFC Securities sees reforms favour incumbents, naming SBI Life, ICICI Lombard and others.

On Tuesday, 16th December, Finance Minister Nirmala Sitharaman introduced the Insurance Laws (Amendment) Bill, 2025, “Sabka Bima Sabki Raksha”, in the Lok Sabha to boost insurance penetration and strengthen policyholder protection. The Bill proposes amendments to the Insurance Act, LIC Act and IRDAI Act, aligning with the government’s vision of “Insurance for All by 2047” and improving ease of doing business.

A key proposal is raising the FDI limit in insurance companies from 74 percent to 100 percent to attract long-term foreign capital and support sector expansion. The Bill proposes a Policyholders’ Education and Protection Fund and empowers IRDAI to recover wrongful gains from insurers and intermediaries.

The Bill introduces a legal framework for digital public infrastructure in the insurance sector, with an emphasis on data security and policyholder privacy. To ease operations, the Bill also proposes one-time registration for intermediaries and raises the IRDAI approval threshold for share transfers from 1 percent to 5 percent of paid-up equity capital.

The Bill lowers the Net Owned Fund requirement for foreign reinsurers to Rs. 1,000 crore from Rs. 5,000 crore, encouraging greater global participation in India’s reinsurance market. It proposes a Standard Operating Procedure for IRDAI regulations and a transparent framework for imposing penalties. Overall, the Bill aims to expand insurance coverage, attract new participants, and strengthen policyholder protection while accelerating sector growth.

As the government moves to overhaul India’s insurance regulations, brokerage HDFC Securities has advised investors to cut through the policy headlines and focus on insurers that are well placed to gain from a more open and competitive framework.

Insurance Stocks in Focus

HDFC Securities has reiterated its positive outlook on a few sector leaders. Its preferred picks include SBI Life Insurance, ICICI Lombard General Insurance, Niva Bupa Health Insurance, and Policybazaar, all of which carry a “buy” rating.

According to the brokerage, the proposed legislative changes represent a gradual yet significant evolution of the sector. While the amendments are unlikely to disrupt the existing competitive landscape, they are expected to improve operating conditions and favour established players with strong business models.

One of the most impactful proposals highlighted by HDFC Securities is the steep cut in the net owned fund requirement for foreign reinsurance branches to Rs. 1,000 crore from Rs. 25,000 crores. This move could expand reinsurance capacity in the country and help reduce industry-wide costs, though it may also put pressure on the domestic market share of General Insurance Corporation of India (GIC Re), currently estimated at around 30-35 percent.

The Bill also permits mergers between insurance and non-insurance entities, paving the way for potential structural realignments within the sector. Under the revised framework, HDFC Securities noted that transactions such as a possible reverse merger of Axis Max Life with Max Financial Services could become feasible.

Written by Shivani Singh

Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post SBI Life and 3 other stocks to benefit from the new insurance bill to keep on your radar appeared first on Trade Brains.