Budget 2025: LIC, ICICI Lombard surge as FM announces 100% FDI in Insurance

Insurance stocks rallied on February 1 after Finance Minister Nirmala Sitharaman announced a major policy shift, increasing the foreign direct investment (FDI) limit in the insurance sector from 74% to 100%. This move, revealed during the Union Budget 2025 presentation, drove notable gains in companies such as LIC India, ICICI Lombard General Insurance, and New India Assurance. Other insurers, including ICICI Prudential Life, HDFC Life, and SBI Life, also saw strong intraday performance.

Industry Applauds FDI Expansion

Market analysts and industry leaders have welcomed the decision, citing its potential to attract global capital, enhance competition, and expand insurance coverage in India, where penetration remains below 5%.

"The 100% FDI allowance in insurance is a game-changer," said Anand Roy, MD & CEO of Star Health & Allied Insurance Co. Ltd. "It will bring in fresh investments, improve efficiencies, and support IRDAI's vision of 'Insurance for All by 2047.'"

Expert Opinions

Financial analysts see this as a significant step in reshaping India’s financial sector.

"Permitting full foreign ownership in insurance represents a fundamental shift in India's financial landscape," said Abhishek Pandya, a research analyst at Stoxbox. "This change will attract global insurers, boost competition, and accelerate market expansion."

Raj Gaikar, a research analyst at SAMCO Securities, highlighted the broader implications: "Greater foreign participation could lead to enhanced product offerings, better pricing, and an overall improvement in service quality. Both insurers and policyholders stand to gain from this development."

Market Impact

The insurance sector has responded positively to the announcement, with major stocks posting gains. Investors are optimistic about the potential for increased competition and innovation, expecting the move to drive long-term growth and stability in the industry.

With this policy shift, India’s insurance sector is poised for transformation, leveraging global expertise and capital to improve accessibility and affordability for policyholders nationwide.