The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025was introduced by the Indian government with the aim of “insurance for all”. The new change will upend the traditional insurance landscape in India. It allows private and foreign investors to enter the insurance ecosystem, which has historically relied on public welfare institutions. The change is crucial as the existing insurance system in India is based on large government-funded schemes such as: Ayushman Bharat (PM-JAY).
The new market participants can offer attractive policies and options in the insurance sector. The biggest concern, however, is whether such privatization will truly lead to equal access for marginalized groups and women. To understand the Sabka Bima Sabki Raksha proposal, it is important to first understand how the insurance sector has evolved over the years.
A timeline of the Indian insurance sector. Photo credit: FII
How the Indian insurance sector developed
India’s insurance industry did not aim to be a social welfare project but became one. Private players initially introduced policies and the sector was later nationalized in the decades after independence to align with the larger vision of social welfare schemes introduced by the Indian government. Insurance policies were seen as a tool to reach all socioeconomic levels and not just financial security.
Insurance policies were seen as a tool to reach all socioeconomic levels and not just financial security.
However, the reforms introduced in the 1990s marked a turning point. Population growth and rapid healthcare developments created enormous business opportunities and made insurance more than just a public duty. Private players entered the sector with the establishment of the Insurance Regulatory and Development Authority (IRDAI). Over time, caps on foreign direct investment (FDI) have been steadily relaxed.
The liberalization of the economy resulted in the focus shifting to financial growth rather than social welfare. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 represents the culmination of this transformation: insurance coverage with a global vision and international capital in India.
Global insurance companies entering the Indian insurance ecosystem are helping to increase capital through foreign direct investment and foreign equity, facilitate technology transfers and improve social security systems. Increasing digitalization has also impacted the insurance industry: insurance claims are processed proactively, claims processing is accelerated, access to purchases is made easier, insurance products tailored based on affordability, etc.
Beyond the insurance business
But this narrative of progress distorts a critical reality. The business model of private insurance companies is largely based on high returns and low risk; The customer profile focus is also saturated with the urban population. This actually takes us away from the real goal of nationalizing the sector: making insurance accessible to everyone and turning it into a social welfare mechanism.
This creates a system in which advances in healthcare are disproportionately targeted at the wealthy, while rural populations are excluded and neglected. This forces them to rely on public health services.
High-risk, low-income groups are left out of this equation and the objectives of the 2025 amendment bill are unlikely to benefit them. This creates a system in which advances in healthcare are disproportionately targeted at the wealthy, while rural populations are excluded and neglected. As a result, they are forced to rely on public health services that are still evolving in terms of technological advancements and adequate investments by the Indian government.
Government programs like Ayushman Bharat (PM-JAY) try to fill these gaps through offerings subsidized health insurance for the economically disadvantaged. Yet these programs typically rely on private insurance companies to operate, making the distinction between welfare and profitability unclear. Furthermore, despite expanding coverage, access is not always equitable, especially when people do not have sufficient knowledge or influence.
The recognition of the social nature of insurance by Indian courts has been recognized for some time. The Supreme Court in the case of Life Insurance Corporation of India v. Consumer Education & Research Center considered that the right to health was an essential part of the right to life enshrined in Article 21. The court emphasized the social role of insurance in ensuring the fulfillment of the guarantees provided for by the Constitution. The Supreme Court has made the same point Biman Krishna Bose v. United India Insurance Co. Ltd.
The gender-specific exclusion of women
This is where the gender-specific consequences of the new amendment become apparent. Women in India are disproportionately employed in informal and unpaid work. 82 percent According to a report by the International Labor Organization (ILO), working women are employed in the informal sector. This structurally excludes them from employer-based health insurance, which continues to exist tied to formal employment of 10 or more employees.
Only as a result 30 percent of women aged 15 to 49 have some form of health insurance, according to data from the National Family Health Survey (NFHS) – 5. State-backed employer-linked schemes such as the Employee State Insurance Scheme (ESIS) or the Central Government Health Scheme (CGHS) reach only a few three to six percent of women national.
The gender pay gap that results in women being employed in regular employment sectors 27 percent less than men in urban India is another barrier preventing women from purchasing private insurance. Women also face difficulty accessing medical care due to discrimination in the medical field and barriers to claiming benefits. Furthermore, patriarchy in families results in the health care and health needs of women being neglected in their households.
Furthermore, insurance products themselves reflect and reproduce inequality. Traditional health insurance in India is designed to cover episodic hospital stays, always taking into account the specific needs of women
Furthermore, insurance products themselves reflect and reproduce inequality. Traditional health insurance in India is designed to cover episodic hospital stays, always taking into account the specific needs of women. For example, maternity insurance comes with waiting periods of two to four years and floors that are lower than actual costs, while infertility treatments and postpartum complications are routinely excluded.
Mental health insurance is also inadequate because mental disorders were listed as an exclusion in the past and outpatient therapy was missing from most plans. In addition, there are women-specific diseases, such as: PCOS, EndometriosisAnd postpartum depressionremain largely uninsured while actuarial practices translate gender assumptions into higher premiums or limited benefits. As foreign and private insurers gain a stronger foothold, there is a risk that these biases will become embedded in an increasingly market-oriented system.
Image source: Elizaveta Galitckaia/Shutterstock
On the one hand, it would be too simplistic to understand liberalization only in the sense of exclusivity. With the growth of the insurance industry, supported by increasing foreign investment, there is the prospect of creating jobs and improving financial inclusion. Women’s participation in insurance policy sales, online banking and microinsurance could well change gender dynamics at a more fundamental level. However, this cannot happen automatically – it requires specific policy considerations.
The key to Sabka Bima Sabki Raksha is its universal ideal, but universality without justice may be nothing but window dressing. While the 2025 amendment raises the foreign direct investment cap to 100 percent, it remains a gamble that foreign capital will increase penetration rates.
On the other hand, there are also private insurance companies serve the middle class on purpose. While workers in the informal sector – a group where women are disproportionately represented – can only get insurance if they are heavily subsidized. Without government subsidies and gender-sensitive product regulations, any market liberalization merely perpetuates a policy failure that has never managed to create a viable business model for the most disadvantaged.
As India opens its insurance industry to international investors, an interesting comparison emerges from a more balanced approach elsewhere. In EuropePrivate insurance serves as a supplement to publicly provided services and not as a replacement. In Thailand, the government-subsidized Universal Coverage Scheme covers informal workers at no cost, while private insurance only serves as a supplementary benefit. In both cases, the state sets the minimum and the market increases the maximum. In the case of India, without subsidies, gender requirements and significant government intervention, there is a real risk that this equation will be completely reversed.
Pooja Damodaran is a lawyer specializing in international law, arbitration and corporate legal strategy. She has an LL.M. from Stockholm University, received his doctorate and was a visiting scholar at the Lauterpacht Center for International Law. She is currently Vice President (Legal) at Siechem Technologies Pvt Ltd.