Insurance broker

What is an insurance broker?

An insurance broker is a registered intermediary that represents the buyer of insurance rather than the insurer. A broker studies the client's risks, asks several insurers for terms, recommends a policy and then supports the client through the policy's life, including claims. Brokers are not tied to any insurer and have no limit on the number of insurers they work with, which is the main legal difference from an insurance agent or a corporate agent.

Brokers in India range from large corporate and reinsurance broking houses that place property, liability and employee benefit programmes, to retail and digital brokers that sell motor, health and term insurance online and through point of sales persons.

How insurance broking works in India

Brokers are registered under Section 42D of the Insurance Act, 1938 and the IRDAI (Insurance Brokers) Regulations, 2018. There are three main categories:

A direct broker's net worth must not fall below ₹50 lakh, and reinsurance and composite brokers must hold at least half their minimum capital as net worth. Brokers also keep a deposit with a scheduled bank under lien to IRDAI and must carry professional indemnity cover. The broker's selling staff are broker qualified persons (BQPs), who must be graduates and pass the prescribed examination. A broker may charge clients a fee for risk management services on commercial risks, with written agreement.

2026 changes. The IRDAI (Insurance Intermediaries) (Amendment) Regulations, 2026, notified on 30 July 2026, removed the three-year renewal cycle. A broker's registration now stays in force while it pays an annual fee: the higher of ₹10,000 or 0.04% of commission and other receipts from insurers and clients in the previous year. Existing brokers must apply for a fresh certificate before 31 January 2027. From 1 January 2027 every proposal form, policy and certificate must name the BQP, POSP or other salesperson who sold it; a policy bought directly on the broker's platform must instead show the principal officer's contact details. Brokers with majority foreign ownership, or earning more than ₹10 crore commission in a year, must publish annual disclosures on commission, related-party payments, profits and dividends.

What an insurance broker means for distribution

• For insurers, brokers are a growth channel with rising cost. IRDAI's September 2026 consultation paper, as summarised by Khaitan and Co, looked at brokers that place about 90% of broker-sourced premium. Between FY23 and FY25 their premium grew 37% while commission including rewards grew 173%, and the average rate roughly doubled from 8.5% to 17%. That data is the backdrop to the proposed commission caps.
• POSP-led retail broking faces the biggest reset. The paper proposes that payouts to POSPs come out of the broker's own commission, that open architecture entities face lower caps than tied agents, and that motor third party cover on new vehicles carry nil commission for such entities. Retail brokers built on high motor and health payouts need to test their unit economics against these proposals.
• Employee benefits broking is also exposed. Proposed group health caps are low and capped per policy, and the paper reported group health commission going as high as 93% in some cases.
• Advice is the defensible part of the model. Placement, claims advocacy, risk surveys and programme design for commercial clients are services that justify a broker's role whatever the commission level. Brokers that can show measurable claims and renewal outcomes are better placed if fee-based remuneration grows.
• Choice must be genuine. Because the broker acts for the client, it is expected to show suitable options from several insurers and to record why one was recommended. The proposed suitability rules would make this documentation enforceable.

Broker vs corporate agent