Summary: This blog provides an overview of India’s insurance distribution framework, explaining the roles of intermediaries like brokers, corporate agents, TPAs, and surveyors under IRDAI regulations. It highlights recent reforms introduced by the Insurance Amendment Bill, 2025, which aim to simplify compliance, expand intermediary definitions, and strengthen policyholder protection. Understanding these evolving rules is crucial for insurers, intermediaries, and stakeholders to navigate the market effectively and ensure transparent, compliant distribution.
Introduction
Insurance distribution refers to the delivery of insurance products to policyholders via authorised channels. A critical link between insurers and policyholders, this ensures that risk transfer, the essence of insurance, to individuals and businesses occurs in a structured, compliant manner. In India, solicitation and servicing of insurance products are undertaken by insurers directly or qualified and registered intermediaries such as agents, brokers, corporate agents, and web aggregators. The regulatory framework seeks to maintain transparency, protect policyholder interests, and uphold market discipline. It is codified under the Insurance Act, 1938 (“Insurance Act”), and implemented through comprehensive regulations issued by the Insurance Regulatory and Development Authority of India(“IRDAI”). Further, the recently enacted Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 (“Insurance Amendment Bill”), introduces reforms to accelerate insurance penetration, enhance policyholder protection, and simplify compliance for intermediaries. As distribution models evolve, understanding the legal contours of insurance distribution is essential for insurers, intermediaries, and stakeholders.
The Gatekeepers: Who Can Distribute Insurance?
The insurance distribution ecosystem in India comprises two broad categories: intermediaries and distributors. Authorised to provide advice, intermediation, and facilitation services between insurers and policyholders, intermediaries include insurance brokers, corporate agents, insurance web aggregators, third party administrators (“TPA”), surveyors and loss assessors (“SLA”), insurance marketing firms (“IMFs”), and common service centres (“CSCs”). They all operate under IRDAI’s stringent registration and conduct requirements. The Insurance Amendment Bill has been expanded the definition of “insurance intermediaries” to include managing general agents (“MGA”) and insurance repositories within its ambit. The IRDAI regulatory framework is yet to codify the role of MGAs and insurance repositories.
Certain entities function solely as distributors such as point-of-sales persons (“PoSPs”), insurance agents, and motor insurance service providers (“MISPs”). Their role is limited to soliciting, marketing, and selling approved products[1] within defined parameters, without engaging in advisory or broking functions.
The Insurance Amendment Bill lays down the registration process for an insurance intermediary and registration under Section 42D is now perpetual, subject to annual fee and compliance, replacing the earlier fixed-term validity.
Insurance Brokers
Insurance brokers operate under a detailed regulatory framework prescribed by the IRDAI (Insurance Broker) Regulations, 2018 (“Broker Regulations”). Advisory, fiduciary, and compliance driven, their role extends beyond mere policy solicitation. They function as professional intermediaries between policyholders and insurers, guiding clients through every stage of the process. The Broker Regulations define an “insurance broker” as any person registered as a direct broker (life, general, or life and general), reinsurance broker, or composite broker. A broker may be any entity such as a company incorporated under the Companies Act, 2013, a co-operative society, or a limited liability partnership (provided no partner is a non-resident entity), or other persons recognised by IRDAI. Additionally, they are required operate exclusively in the insurance broking space and incorporate a reference to broking within its registered name. They must maintain mandatory professional indemnity insurance with minimum coverage of INR 1,00,00,000 for direct brokers and INR 10,00,00,000 for composite brokers. Further, the Broker Regulations prescribe the following minimum capital requirements:
| Category of Broker | Minimum Paid-up Capital / Contribution (in INR) | Net Worth Requirement (in INR) | Deposit Requirement (in INR) |
| Direct Broker | 75,00,000 | 50,00,000 | 10,00,000 |
| Reinsurance Broker | 4,00,00,000 | 50% of minimum capital | 10% of minimum capital |
| Composite Broker | 5,00,00,000 |
The remuneration for insurance brokers for direct insurance business will be in line with IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024) (“EOM Regulations”). For reinsurance, payments will be as per the prevailing market practices, with monthly settlements and no cross-adjustments. Furthermore, brokers may also provide risk management services for commercial risks under a written client mandate but must keep such fees separate from regulated remuneration. Additionally, brokers may engage in claims consultancy with mutually agreed fees provided percentage‑based arrangements remain excluded. Finally, to prevent concentration risk, remuneration from any single client must not exceed 50 per cent of annual income, excluding reinsurance and government business.
Corporate Agents
A corporate agent may be any entity such as a company, a limited liability partnership, a cooperative society, a bank, a non-banking financial institution, a non-governmental organisation, and any other person as recognised by the IRDAI to act as a corporate agent. Under the IRDAI (Registration of Corporate Agents) Regulations, 2015 (“Corporate Agents Regulations”), these entities are authorised to solicit, procure, and service insurance products across life, general, and health segments. They differ from an insurance brokers in that they represent insurers and can tie up with a maximum of nine insurers in each line of business (life, general, and health), whereas brokers represent customers and can access products from unlimited insurers.
Under the Corporate Agents Regulations, a corporate agency license is mandatory for operation. Applicants already registered with another financial regulator must obtain a no-objection certificate from that authority and submit it with their application. At the time of seeking registration, every corporate agent must file a board-approved policy on open architecture, outlining how it will solicit and service insurance products. This policy should clearly state the approach to single or multiple tie-ups, business mix, and implementation of open architecture principles. Further, exclusive corporate agents, i.e., entities engaged exclusively in insurance distribution must maintain a minimum equity share capital and net worth of INR 50,00,000. Additionally, professional indemnity insurance becomes mandatory only when more than 50 per cent of their total revenue arises from insurance intermediation.
The payment structure for corporate agents is regulated, and insurers may pay them only in the manner prescribed by IRDAI. Under the EOM Regulations, insurers have the flexibility to set commission levels through board-approved policies, but total commissions in a financial year must remain within the expense of management limits specified by the EOM Regulations.
Third Party Administrators
TPAs are companies registered with IRDAI and governed by the IRDAI (Third Party Administrators – Health Services) Regulations, 2016 (“TPA Regulations”). Engaged by insurers to provide health services under health insurance policies, the main and sole object of TPAs is to exclusively provide health services. TPAs cannot engage in any other business beyond their core functions of processing claims (cashless and reimbursement), facilitating pre-authorisation, conducting pre-policy medical checks, and offering support for hospitalisation and travel health covers. TPAs earn service fees from insurers as per health service agreements. To operate, TPAs must maintain a minimum paid-up equity capital of INR 4,00,00,000 and net worth of INR 1,00,00,000 and have “insurance TPA” in their name. They must employ qualified personnel, including a chief medical officer holding a minimum qualification of MBBS and a chief executive officer/chief administrative officer meeting IRDAI norms. TPAs cannot solicit insurance business, reject claims, make direct claim payments, or share confidential data except as permitted by law. They cannot maintain any float fund or account for payment of insurance claims nor outsource servicing of policies to any other entity. Further, they must refrain from inducing policyholders or network providers to omit material information or submit wrong information. TPAs play a critical role in bridging insurers, hospitals, and policyholders, ensuring efficient claims servicing and compliance-driven healthcare support.
Surveyors and Loss Assessors
SLAs are governed by the IRDAI (Insurance Surveyors and Loss Assessors) Regulations, 2015 (“SLA Regulations”). They are licensed professionals or corporate entities appointed by insurers or insured to investigate, quantify, validate, and report losses under insurance policies. They earn fees agreed upon for survey and loss assessment and cannot accept any direct or indirect benefits beyond this. To operate, SLAs must meet prescribed academic and technical qualifications, pass the surveyor and loss assessor examination, and complete practical training. Since corporate SLAs are companies or limited liability partnerships licensed by IRDAI under the SLA Regulations, they must have at least two licensed directors and include “insurance SLA” in their name. While there is no fixed minimum capital for individuals, corporate SLAs must comply with fit-and-proper norms and governance requirements. They must be appointed for claims exceeding INR 50,000 in motor insurance and INR 1,00,000 in other classes of business, and such appointment should be made within 72 hours of the loss being known. The SLAs are required to submit their survey report within 30 days of appointment, with an extension of up to six months, allowed only in exceptional cases and with insurer approval. Their core functions include inspecting damaged property, determining the cause and extent of loss, advising on loss minimisation, and submitting detailed reports to insurers within stipulated timelines.
Part 2 of this series explores the remaining distribution channels including insurance web aggregators, insurance marketing firms, and common service centres. It also examines the prohibited activities under the regulatory framework, policyholder-centric reforms, the impact of data protection laws on distribution, and the way forward for India’s insurance distribution ecosystem.
For further information, please contact:
Pranjita Barman, Partner, Cyril Amarchand Mangaldas
pranjita.barman@cyrilshroff.com
[1] Specifically, PoSPs, and MISPs are subject to clearly defined product parameters and approved product lists, with PoSPs limited to simple products with prescribed sum assured caps, and MISPs restricted exclusively to motor insurance policies and add-ons. Conversely, insurance brokers, corporate agents, insurance marketing firms, and traditional insurance agents face no comparable product-specific restrictions.
