The new insurance law has come into effect from 5 February.

The Indian government has formally notified February 5, 2026, as the effective date for the majority of provisions under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, marking a significant milestone in the reform of the country’s insurance sector.

A gazette notification issued by the Ministry of Finance on February 3 confirmed that all provisions of the Act, with the exception of Section 25, will come into force from February 5. The Act introduces wide-ranging changes covering governance, capital participation, policyholder protection, and institutional oversight.

Section 25, however, has been excluded from this initial phase. Industry experts indicate that this section relates to enhanced governance and conflict-of-interest regulations, including restrictions on overlapping directorships and cross-ownership among insurers, banks, and investment companies. Its delayed implementation suggests that detailed regulatory frameworks and operational guidelines will be finalised before this provision is activated.

“The implementation of the amended insurance laws permitting 100 percent foreign direct investment represents a transformative step for India’s insurance landscape,” said Hanut Mehta, CEO and co-founder of Bimapay Finsure. “Beyond capital inflows, these reforms are designed to bolster governance, transparency, and consumer protection, providing clarity and confidence for both domestic and global stakeholders.”

The reforms embed several structural safeguards to strengthen the sector:

Policyholder education fund: Dedicated resources to educate and inform policyholders.

Data protection alignment: Compliance with the Digital Personal Data Protection (DPDP) Act.

Consultative regulation: Enhanced engagement between regulators and market participants.

Mehta emphasised that these measures reflect a consumer-centric approach, prioritising trust and long-term credibility as India opens its insurance market to full foreign participation.

The key provisions of the amended Act can be summarised as follows:

Industry analysts expect that full FDI liberalisation will catalyse both capital inflows and governance improvements, while the policyholder-focused provisions will enhance consumer confidence and market stability. As Section 25 is finalised, insurers are likely to adopt stricter compliance norms, further strengthening the sector’s regulatory architecture.

With these reforms, India positions itself to attract global insurance players while simultaneously reinforcing domestic trust and regulatory credibility, setting the stage for a more transparent, inclusive, and resilient insurance ecosystem.