Register Trademark For your Business

Insurance (Amendment) Act 2021: A Complete Guide

Insurance (Amendment) Act 2021
| Updated: Apr 01, 2021 | Category: Insurance Broker, News

Recently, the GOI (Government of India) has passed the Insurance Amendment Act 2021, on 25.03.2021, to amend the provisions of the Insurance Act 1938.

Further, the said amended act has received the presidential assent on 25.03.2021 and will come into effect from the date chosen for publication by the Central Government.

In this learning blog, we will discuss the objective and key provisions of the Insurance Amendment Act 2021.

Key objective of the Insurance Amendment Act 2021

The key objective of the act is to achieve the purpose of the Government’s FDI (Foreign Direct Investment) Policy by raising the threshold limit of the foreign investment in the Indian insurance companies from the prevailing 49 per cent to 74 per cent, and to permit the foreign ownership and control with the safeguards.

Read our article:How to Get Insurance Broker License in India

Key Provisions of the Amended Insurance Act

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

Substitution of Section 2 Clause (7A) Sub Clause (b)

The existing section 2 clause (7A) sub clause (b) will be substituted with new provisions, which are as follows:

(b) in which the total aggregate holdings of the equity shares by the foreign investors comprising of portfolio investors do not exceed 74 per cent of the total paid-up equity capital of such an Indian Insurance Company and the foreign direct investment will be subject to the conditions & manner, as may be specified.

Amendment in Section 27

It shall be noted that in the provision of section 27 of the principal Act, i.e., the Insurance Act 1938, the explanation stated in sub-section (7) shall stand omitted.

Substitution of Section 114 Subsection (2) Clause (aaa)

It shall be noted that in the provision of section 114 subsection (2) clause (aaa) of the principal Act, i.e., Insurance Act 1938[1], shall be substituted with the new one, which is as follows:

(aaa) the conditions and the manner of the foreign direct investment under sub-clause (b) of clause (7A) of section 2.


In a nutshell, to accomplish the objective of the Government’s FDI Policy, the government has amended the provisions of the Insurance Act 1938 and has increased the limit of Foreign Investment in the Indian Insurance Companies from 49 to 74%. The said amended act will be in force from the date assigned by the government for publication in the Official Gazette. 

Read our article:What Role Does IRDA Play in the Development of Insurance Sector?


Spread the love

Shivani has completed her B com LLB (Hons) and has the experience of writing various research papers during her college time. Earlier she was working as an Associate in a Delhi based Law Firm, but her interest in writing made her pursue Legal Content Writing as a career. Her core area of interest is in writing about various legal enactments, tax, and finance.

Top rated CA Service provider

Related Articles

Revision of Disclosure Format
| Date: Feb 13, 2021 | Category: News, SEBI Advisory

Revision of Disclosure Format under Prohibition of Insider Trading Regulations by SEBI

Recently, SEBI, by way of the powers provided under the provisions of section 11 (1) of the SEBI Act 1992, together with the rule 4 (3) and 11 of the...

Read More
What are the Benefits of an Insurance Broker License?
| Date: Apr 20, 2021 | Category: Insurance Broker

What are the Benefits of an Insurance Broker License? – An Overview

Insurance Brokers signify their customers and render advice to a potential customer having a strong interest in buying insurance products or services. Such individuals are highly skilled and have deep...

Read More
Difference between Insurance Brokers and Agents
| Date: Mar 05, 2021 | Category: Insurance Broker, IRDA Advisory

Difference between Insurance Brokers and Agents – An Overview

Knowing the difference between insurance brokers and agents is very important to understand how you as an insurance holder can make the best use of their services to purchase other...

Read More


Hi! My name is Akanksha! Let's talk.