Summary: The blog notes that while India’s insurance framework does not prohibit broker listings, the absence of explicit IRDAI guidance may have limited access to public markets. While recent reforms (such as perpetual registration) address some hurdles, the 25% investor cap under broker regulations may create a tension with SEBI’s minimum public float requirement. The piece suggests that it may be helpful for IRDAI to consider a clear, conditions-based listing framework for brokers, drawing on existing models for insurers and the proposed pathway for TPAs.
Introduction
Several of the country’s insurance brokers now operate at a significant scale serving large corporate and institutional clients, employing hundreds of qualified professionals and transacting billions of rupees in premium. For businesses of this maturity and scale, the access to public capital markets is not merely desirable but is a competitive necessity. On the one hand, listing would enable insurance brokers to raise capital for purposes such as technology investment, geographic expansion, and talent attraction, whilst on the other hand, it will also subject them to the governance disciplines of SEBI.
Yet, for an insurance broker, the path to a listing has not been straightforward and so we examine the impediments to achieve listing and make the case for IRDAI to prescribe an explicit, conditions-based pathway enabling insurance brokers the access to public capital markets.
Legal Framework
‘Insurance brokers’ under the IRDAI (Insurance Brokers) Regulations, 2018 (Brokers Regulations), may be set up as companies incorporated under the Companies Act, 2013 (Companies Act), entitling them to the full suite of rights and procedures that the Companies Act confers, unless of course, a specific provision of insurance law is inconsistent with such entitlement. This principle has been affirmed by the National Company Law Tribunal (NCLT) for insurers. In what may be referred to as the “Shriram Case”, NCLT benches have reiterated that as specified under Section 1(4)(b) of the Companies Act, the provisions of the Companies Act shall apply to insurance companies, save to the extent they are inconsistent with the provisions of the Insurance Act, 1938 (Insurance Act), or the Insurance Regulatory and Development Authority Act, 1999 (IRDA Act).
In the Shriram case, NCLT benches approved two schemes of amalgamation: (i) the merger of Shriram Life Insurance Company Limited with its holding company, Shriram LI Holdings Private Limited; and (ii) the merger of Shriram General Insurance Company Limited with its holding company, Shriram GI Holdings Private Limited – both effected under Sections 230-232 of the Companies Act. Critically, both schemes involved the merger of an insurer with a non-insurer entity, a structure without express legislative sanction under the Insurance Act at the time. The NCLT observed that Sections 230-232 of the Companies Act, governing schemes of arrangement and amalgamation, apply equally to insurance companies, and applicability of these provisions is not displaced by the Insurance Act. Since Section 35 of the Insurance Act (which then governed only insurer-to-insurer amalgamations) was deemed to be inapplicable to the Shriram schemes, the NCLT held that the governing law for those mergers was the Companies Act and the rules made thereunder.
Applying the principle enunciated in the Shriram Case, it can be argued that since the IRDAI-prescribed insurance regulatory framework for insurance brokers (including the Insurance Act, the IRDA Act and the Brokers Regulations) does not contain any provision that prohibits or expressly governs or regulates the listing of insurance brokers, such insurance brokers are entitled to avail the listing framework under the Companies Act and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, and be treated as any other such company for the purposes of accessing the equity capital markets.
In fact, not only are there no prohibitive provisions under the Brokers Regulations, it also explicitly acknowledges the possibility of a listed insurance broker. The Form A through which an entity applies for a Certificate of Registration as an insurance broker contains a specific field that reads as follows: “If listed, names of Stock Exchanges and latest share price”.
Structural Impediments
Notwithstanding the reliance that may be placed on the applicable provisions of the Companies Act, the extant insurance regulatory framework makes listing of an insurance broker practically difficult, and legally uncertain. The fundamental impediment to insurance broker listing has been the fixed three-year validity of the Certificate of Registration. A broker whose operating licence has a fixed three-year expiry, and whose ability to solicit new business is contingent on that licence being validly “held at all times”, carried an inherent regulatory discontinuity risk. Unfortunately, this framework is not ideal for public shareholders.
However, Section 42D of the Insurance Act, as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 (Amendment Act), now provides that the registration of an insurance intermediary shall remain in force, subject to payment of such annual fee as may be specified by the regulations, until such registration is suspended or cancelled. The exposure draft for the IRDAI (Insurance Intermediaries) (Amendment) Regulations, 2026 (Intermediaries Exposure Draft), gives operational shape to this statutory change inter-alia for insurance brokers. With perpetual registration replacing the three-year renewal cycle, the primary structural impediment to broker listing is now resolved.
A second and equally significant chokepoint is embedded in the Brokers Regulations, which is the investor shareholding cap. The Brokers Regulations impose a strict limitation on Indian investor shareholding in an insurance broker: “no single investor may hold more than 25% of the paid-up equity share capital of a broker, and the aggregate holding of all investors collectively cannot exceed 25% of the paid-up equity share capital”.
In a typical IPO structure, a promoter-backed company lists a portion of its equity via either a fresh issue or an offer for sale and creates a public float. In most listed companies of meaningful scale, the public float routinely exceeds 25% of total paid-up capital. In fact, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with the Securities Contracts (Regulation) Rules, 1957, require a minimum public shareholding of 25% for most listed entities. The consequence is a direct conflict: SEBI mandates a minimum public (non-promoter) shareholding of 25%, whilst the Brokers Regulations cap aggregate investor (non-promoter) shareholding at 25%. Therefore, for a listing of an insurance broker to go through, it would be impossible without the IRDAI replacing the 25% investor shareholding cap with a more calibrated framework. For instance, for insurers, the IRDAI has relaxed the promoter threshold from 50% to 26% for listed insurers with a five-year solvency track record.
Recent Developments
A recent regulatory development has cause us to focus on the issues concerning listing of brokers, which is the explicit, conditions-based listing pathway for Third Party Administrators (TPAs) prescribed by the IRDAI under the exposure draft for the IRDAI (Third Party Administrators – Health Services) (Amendment) Regulations, 2026 (TPA Exposure Draft).
The TPA Exposure Draft proposes to insert a new Regulation 13(1A), which will enable a TPA to approach the appropriate financial sector regulator for divestment and/ or fresh issue and listing of equity shares on recognised stock exchanges, subject to a set of conditions that closely mirror the insurer framework: inter-alia a board resolution, full compliance with IRDAI stipulations, prior approval for share transfers or issuances where required and at least 15 days’ prior intimation to the IRDAI before approaching the financial sector regulator. The TPA Exposure Draft specifically carves out the listing scenario from the obligation to disclose information of prospective transferees, aligning with the equivalent carve-out in the insurer listing framework.
This conditions-based model adopted for insurers and now proposed for TPAs provides a ready template. Replicating it for insurance brokers, with appropriate calibration, would close the gap in IRDAI’s intermediary listing architecture and bring brokers in line with the broader direction of regulatory travel.
Conclusion
The case for extending that model to insurance brokers is both timely and compelling. As discussed in our earlier piece on Mergers and Acquisitions in the Insurance Broking Space, for financial investors and private equity funds that have backed insurance broker groups, a listing of the broker entity’s shares on a recognised stock exchange represents a natural progression in the company’s lifecycle – one that enhances governance, broadens the capital base, and enables the broker to access public market capital for sustained growth. An explicit listing framework for brokers would open the door to a direct and efficient capital-raising pathway, making the Indian insurance broking sector a more attractive destination for institutional and private equity capital at the investment stage itself. What remains is for IRDAI to take the final step: prescribe an explicit, conditions-based listing pathway for insurance brokers, and rationalise the shareholding ceiling that would otherwise render such a pathway unviable.
For further information, please contact:
Indranath Bishnu, Partner, Cyril Amarchand Mangaldas
indranath.bishnu@cyrilshroff.com
