Question 1

The Sabka Bima Sabki Raksha Bill mandates the privatization of all existing public sector insurance companies.

Accepted Answer

The Bill increases FDI limits to spur competition but does not mandate the outright privatization of entities like LIC; it merely grants them greater operational autonomy.

Question 2

With the new 'ease of doing business' rules, insurance companies can now merge with other companies without regulatory approval.

Accepted Answer

While the Bill allows mergers between insurers and non-insurance entities for the first time, IRDAI remains the sole approval authority for any such scheme of arrangement.

Question 3

Consider the following statements regarding the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025:
1. It reduces the net-owned fund requirement for foreign reinsurance branches from Rs 5,000 crore to Rs 1,000 crore.
2. It mandates that the majority of the Board of Directors of an insurance company with foreign investment must be resident Indian citizens.
3. It empowers IRDAI to approve the scheme of arrangement between an insurer and a company not engaged in the insurance business.
How many of the above statements are correct?

Accepted Answer

(b) Only two — Statements 1 and 3 are correct. The Act slashes the capital requirement for foreign reinsurers to Rs 1,000 crore and allows mergers between insurers and non-insurers. Statement 2 is incorrect because the 2025 amendments actually relaxed governance norms: previously a majority was required, but now only one among the CEO, MD, or Chairperson needs to be a resident Indian citizen.

Question 4

Match the legislative act amended by the 2025 Insurance Bill (List I) with the specific provision it introduced (List II):
List I:
A. Insurance Act, 1938
B. Life Insurance Corporation Act, 1956
C. IRDAI Act, 1999
List II:
1. Granted operational autonomy to open zonal offices and align foreign operations.
2. Empowered the authority to constitute a Policyholders' Education and Protection Fund.
3. Raised the threshold for prior regulatory approval of share transfers from 1 percent to 5 percent.
Select the correct code:

Accepted Answer

(a) A-3, B-1, C-2 — A matches 3: The Insurance Act (1938) amendment deals with basic corporate rules like the share transfer threshold (raised from 1 percent to 5 percent). B matches 1: The LIC Act (1956) amendment specifically grants LIC operational autonomy for zonal offices. C matches 2: The IRDAI Act (1999) expansion includes the new Policyholders' fund and disgorgement powers for the regulator.

Question 5

Assertion (A): The Sabka Bima Sabki Raksha Act, 2025 completely removes IRDAI's power to intervene in the internal management of insurance companies to promote ease of doing business.
Reason (R): The Act allows foreign direct investment up to 100 percent in Indian insurance companies under the automatic route.
Select the correct answer:

Accepted Answer

(d) A is false but R is true. — R is true as the 2025 Act indeed raises the FDI limit to 100 percent. A is false because the Act actually strengthens IRDAI's regulatory oversight, rather than removing it. It explicitly grants IRDAI the power to supersede the Board of Directors of an insurer and appoint an Administrator if the company acts prejudicially against policyholders.

Sabka Bima Sabki Raksha Insurance Bill Passed

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