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Key Takeaways
Most companies buying group or commercial cover are better served by a licensed insurance broker, because a broker is legally bound to act in the client’s interest while an agent is appointed by, and represents, the insurer.
Under the IRDAI (Appointment of Insurance Agents) Regulations, 2016, an individual agent cannot hold agency appointments with more than one life insurer, one general insurer, one health insurer and one of each mono-line insurer.
A corporate agent may tie up with up to three insurers in each of the life, general and health categories, following the 2022 amendment to the IRDAI (Registration of Corporate Agents) Regulations, 2015.
A web aggregator, under the IRDAI (Insurance Web Aggregators) Regulations, 2017, maintains a website for price comparison and product information across insurers, which suits retail products rather than negotiated corporate programmes.
Every direct broker must hold professional indemnity cover of two times its annual remuneration subject to a minimum of one crore rupees, under Regulation 24 read with Schedule II Form S of the IRDAI (Insurance Brokers) Regulations, 2018.
A single policy cannot carry both broker remuneration and agency commission, so the channel chosen at placement is the channel that services the policy for the year.
The three channels are not three flavours of the same service. They sit in different regulatory categories, owe duties to different parties, and are paid under different rules. An agent is appointed by an insurer and solicits that insurer’s products. A web aggregator runs a comparison website and passes leads to insurers. A broker is registered by IRDAI in its own right, takes a written mandate from the client, and is required by its code of conduct to act in the client’s interest. For a company buying group health, liability or property cover, where the policy is negotiated rather than picked off a shelf, that difference in who the intermediary answers to is the whole decision.
What is the difference between an insurance broker, an agent and a web aggregator?
An insurance broker is an entity registered under the IRDAI (Insurance Brokers) Regulations, 2018 as a direct, reinsurance or composite broker. The regulations describe a direct broker’s functions in advisory rather than transactional terms: obtaining detailed information about the client’s business and risk management philosophy, familiarising itself with the underwriting information so it can be explained to insurers, advising on appropriate cover and terms, submitting quotations for the client’s consideration, and assisting in the negotiation of claims.
An insurance agent is appointed by an insurer to solicit and procure that insurer’s business, so the agent’s product range is bounded by who has appointed them. The 2016 regulations define a composite insurance agent as an individual appointed by two or more insurers on the condition that they shall not act for more than one life insurer, one general insurer, one health insurer and one of each mono-line insurer. A corporate agent, typically a bank or distribution company, operates under a separate 2015 regulation and, since the 2022 amendment, may hold up to three tie-ups per category.
A web aggregator is described by IRDAI as an intermediary maintaining a website that lets prospects compare prices and view product information across insurers, under regulations effective 13 April 2017. The model is built for products that can be displayed, filtered and bought without underwriting negotiation. That describes most retail motor, travel and individual health business, and almost no corporate programme.
Who does each channel legally represent?
The answer sits in the regulations rather than in market convention. Schedule I Form H, the code of conduct every broker must follow, opens by requiring that every insurance broker shall discharge their functions in the interest of the clients or policyholders. The same code requires a broker to ensure the client understands on whose behalf it is acting, and to obtain a written mandate from the client to represent the client to the insurer.
An agent has no equivalent client mandate, because the appointment belongs to the insurer. That is not a criticism of agents, who are regulated, examined and often highly capable. It is a structural fact about where the duty sits. When a group health renewal returns with a heavier loading than last year, an agent’s ability to challenge it is bounded by the insurer that appointed them, while a broker holding your mandate can take the same submission to the wider market.
The practical test is short. Ask which entity appointed the person in front of you, how many insurers they can approach, and whether they will give you a written mandate.