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Insurance Amendment Bill may be tabled in the Winter Session, says FM Sitharaman - BusinessToday

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  Published in Business and Finance on Monday, September 15th 2025 at 2:24 GMT by Business Today
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Insurance Amendment Bill Set for Winter‑Session Debates – Finance Minister SITHARAMAN Signals Fresh Reforms

In a landmark announcement that could reshape the contours of India’s insurance landscape, Finance Minister SITHARAMAN revealed that the Government intends to introduce a comprehensive Insurance Amendment Bill in the forthcoming winter parliamentary session. The move follows a series of consultations with insurers, brokers, consumer‑rights groups, and technology providers, all of whom have pressed for a legal framework that is better aligned with today’s digital economy, climate‑risks and the country’s growing appetite for inclusive insurance.

Why a new Bill is needed

India’s current insurance law dates back to 1938 and was last significantly revised in 2005. In the intervening years, the sector has undergone a tectonic shift: mobile‑first platforms, data‑driven underwriting, and a surge in micro‑insurance products tailored for rural and low‑income households. However, the old statutes have struggled to keep pace with these innovations, creating gaps around consumer protection, data privacy, and regulatory oversight. A recent wave of high‑profile policy‑holder complaints—ranging from opaque claim processes to allegations of “mis‑selling” of health plans—has intensified the urgency for a fresh legislative scaffold.

SITHARAMAN said the Bill will "embed the core principles of transparency, fairness and consumer protection" while simultaneously "providing the flexibility that insurers need to innovate and serve diverse segments of the population". The Finance Minister also underscored that the reforms are part of a broader agenda to "accelerate financial inclusion, modernise the regulatory regime and safeguard the public’s trust in the sector."

Key Provisions of the Proposed Bill

The draft, released in the Ministry’s press brief, contains a host of transformative measures, several of which are highlighted below.

1. Digital‑First Claims & Underwriting
   The Bill will mandate the use of electronic claim filing, digital signatures and real‑time risk analytics for all major insurance products. Insurers will be required to provide “live” dashboards for policyholders to track claim status, enhancing transparency and reducing dispute timelines.

2. Consumer‑Protection & Grievance Redressal
   A new “Consumer Protection in Insurance” chapter will introduce a fast‑track, third‑party mediation mechanism, set out minimum time‑frames for claim settlements and impose stricter penalties for insurers that engage in unfair practices or “mis‑selling”. The Bill will also extend coverage of existing consumer‑rights laws to include a broader class of “micro‑policyholders” operating through digital platforms.

3. Data Privacy & Cyber‑Security
   The Bill will align the insurance sector with the Personal Data Protection Bill, establishing mandatory data‑handling protocols, consent frameworks and breach‑notification obligations. Insurers will be required to conduct regular cyber‑security audits and maintain robust safeguards against data leaks.

4. Sustainable & Climate‑Resilient Insurance
   Recognizing the increasing frequency of climate‑induced disasters, the Bill proposes the creation of a “Climate‑Risk Insurance Fund” that insurers can tap for disaster relief payouts. Additionally, it will incentivise “green insurance” products that reward low‑emission vehicles, renewable‑energy projects and energy‑efficient housing.

5. Reinforced Regulatory Oversight
   The Insurance Regulatory and Development Authority of India (IRDAI) will be endowed with expanded powers, including the authority to issue sector‑wide guidelines, conduct periodic audits, and levy compliance penalties. The Bill will also create a “Digital Insurance Regulatory Hub” to centralise data collection and real‑time monitoring of industry performance.

6. New Product Categories & Risk Pools
   A new section will authorise the development of specialized insurance products such as “Digital‑Infrastructure Protection”, “Cyber‑Insurance” for small and medium enterprises (SMEs), and “Agricultural‑Tech Insurance” to support agri‑tech start‑ups. The Bill also envisages the establishment of “Risk‑Pooling Funds” for sectors that currently lack adequate coverage, such as small‑scale manufacturing.

Industry Response

The announcement has been welcomed by a wide cross‑section of stakeholders. FICCI’s insurance division head, Arjun Rathi, noted that “the Bill signals the Government’s commitment to creating a level playing field for both incumbents and new entrants in the digital insurance space.” Meanwhile, the Insurance Association of India (IAI) expressed appreciation for the emphasis on consumer protection but cautioned that “implementation will need clear guidelines and adequate resources for regulatory enforcement.”

On the technology front, representatives from major insurtech firms—including policy‑digitizer, InsureHub and HealthGuard—highlighted the Bill’s provisions on data privacy and real‑time analytics as a "game‑changer" that would enable them to deliver highly personalised products with lower cost‑to‑serve.

Legislative Road‑Map

SITHARAMAN hinted that the Bill will be drafted in close collaboration with IRDAI, the Ministry of Finance, and the Ministry of Consumer Affairs, Food & Public Distribution. It will undergo a public consultation phase in the next quarter, with inputs from industry bodies, consumer groups and academia. The Government expects to table the Bill in the winter session, which begins in November, after the Budget is presented in October.

The Finance Minister also emphasized that the legislative process will be "transparent" and that "stakeholder feedback will be integral at every stage". He assured that the Bill will not impose undue burdens on existing insurers but will instead "harmonise regulatory practices with global best standards".

Looking Ahead

If passed, the Insurance Amendment Bill would not only modernise the sector’s legal backbone but also reinforce India’s positioning as a global insurance hub. By marrying technology, consumer‑rights safeguards and climate‑resilience, the legislation promises to create a more inclusive and resilient insurance ecosystem.

With the winter session looming, the industry, regulators and consumer advocates will be watching closely to see how the Bill unfolds. The next few months will be critical in shaping the future of Indian insurance—a future that promises to be more digital, more equitable and more resilient than ever before.