Authors:
R. K. Rajkhanna, G. Mahith Vidhyasagar, Mariya Fatma

Addresses:
School of Law, SRM Institute of Science and Technology, Kattankullatur, Chennai, Tamil Nadu, India.

Abstract:

India's liberalisation of Foreign Direct Investment (FDI) has helped the state control ownership and regulate sensitive areas like insurance. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, is the latest development in India's insurance sector's FDI liberalisation. The unified FDI policy and Management Act (FEMA) resolves regulatory and operational complaints, while the Insurance Regulatory and Development Authority of India regulates the sector. The paper analyses compliance and risk modulation across different regulatory frameworks, and how the shift from capped foreign ownership to absolute foreign control affects them. It illuminates the governance transition, including changes to board composition, majority residency requirements, enhanced disclosure and transparency, reporting obligations, etc. The paper also discusses IRDAI's expansion of powers, the policyholder's Education Protection Fund, and the switch in the solvency framework from a fixed-margin to a risk-based capital (RBC) framework. These innovations are considered compensatory regulatory protections to protect policyholders and sustain the system in a fully liberalised ownership environment. India's efforts to integrate market conduct with governance capacity and regulatory framework are also noted. The paper finds that 100% FDI in insurance is a deliberate, measured endeavour within a specific regulatory context, with development goals, not deregulation.

Keywords: Corporate Governance; Risk Management; Foreign Direct Investment (FDI); Risk-Based Capital (RBC); Reporting Obligations; Majority Residency Requirements; Education Protection Fund.

Received on: 12/03/2025, Revised on: 15/06/2025, Accepted on: 28/08/2025, Published on: 12/03/2026

DOI: 10.69888/FTSSSL.2026.000586

FMDB Transactions on Sustainable Social Sciences Letters , 2026 Vol. 4 No. 1, Pages: 42–51

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