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India InsurTech Thought Leadership

The state of the Insurance regulatory framework in India and why we need MGAs


  1. India is one of the fastest-growing economies in the world, with a rapidly expanding middle class and a large population. Despite this growth, insurance penetration in India remains low, with only about 3.76%.

The current state and gap in the Indian regulatory framework : 

  1. The Indian insurance industry has seen significant growth in recent years, driven by increasing awareness of the importance of insurance, rising disposable incomes, and favorable government policies. However, despite this growth, the insurance distribution network in India remains fragmented and dominated by traditional distribution channels such as agents and brokers.

  2. The Insurer has delegated distribution authority to Brokers, corporate agents, agents, etc, however, there is currently no channel in our regulatory framework for Insurers to delegate underwriting authority 


  • One of the key challenges facing the insurance distribution network in India is the low penetration of insurance products in rural areas. Although there has been a push to increase insurance penetration in these areas, the lack of physical infrastructure and limited access to financial services remains a barrier to distribution.

  • To address this issue, the Indian government has introduced a number of initiatives to promote digital distribution channels such as online portals, mobile applications, and bank insurance partnerships. The aim of these initiatives is to make insurance products more accessible and affordable for customers, particularly in rural and remote areas.

  • However, despite these efforts, traditional distribution channels such as agents and brokers continue to dominate the market. This is partly due to the preference of Indian customers for personalized service and the trust they place in these traditional channels.

  • Overall, while the Indian insurance industry has made significant strides in recent years, the distribution network remains fragmented and dominated by traditional channels. To address this, insurance companies and MGAs will need to leverage technology and partnerships to improve access to insurance products and services, particularly in underserved areas.

How MGAs can fill this gap 

As an MGA (Managing General Agent) in the Indian insurance market, one can fill the gap in the current distribution setup by leveraging expertise and resources in a particular line of business to offer customized insurance solutions to customers that are not easily accessible through traditional distribution channels. There is the opportunity to fill the gap in the current insurance distribution setup by offering specialized insurance products, expanding distribution channels, using technology to improve the customer experience, offering value-added services, and focusing on customer education.

  1. Specialized insurance products: As an MGA, you can offer specialized insurance products that cater to the specific needs of niche markets, which are not currently being serviced by traditional insurance companies. This can include products such as cyber insurance, event cancellation insurance, or travel insurance for specific destinations.

  2. Expand distribution channels: You can leverage your distribution network to expand the reach of insurance products to customers in remote or underserved areas. This can be achieved through partnerships with local agents, brokers, or banks to increase access to insurance products in these areas.

  3. Technology and customer experience: Technology can be leveraged to simplify the insurance buying process for customers. By using digital platforms, such as mobile apps or online portals, you can make it easier for customers to research, compare, and purchase insurance policies.

  4. Value-added services: In addition to traditional insurance products, MGAs can offer value-added services that provide additional benefits to customers. For example, you could offer risk management services or claims assistance, which can improve the overall customer experience.

  5. Education: Many customers in India may not be fully aware of the benefits of insurance or how to navigate the complex insurance market. By focusing on customer education, you can help customers make informed decisions about their insurance needs, which can increase customer satisfaction and loyalty.

What is an MGA? 

An MGA is a type of insurance intermediary that acts as an intermediary between insurers and policyholders. MGAs have the authority to underwrite policies on behalf of insurers and can provide a range of services, including policy administration, claims handling, and risk management.

Why India Needs MGAs?


India has a large population, which means there is a huge potential market for insurance products. However, the insurance industry in India is dominated by a few large players, which can make it difficult for new entrants to enter the market. MGAs can help to level the playing field by providing a way for smaller insurers to access the market.

In addition, MGAs can help to improve insurance penetration in India by providing more targeted insurance products. For example, MGAs can develop insurance products that are tailored to the needs of specific industries or regions.

Statistics on the Need for an MGA in India

  1. Low insurance penetration: Despite having a large population, insurance penetration in India is low. As of 2019, only about 3.76% of the population had any form of insurance coverage.

  2. The dominance of large players: The insurance industry in India is dominated by a few large players. As of March 2020, the top five insurers in India accounted for 63.5% of the market share.

  3. Potential market size: India has a large population, with over 1.3 billion people. This represents a huge potential market for insurance products.

  4. Need for targeted insurance products: India is a diverse country, with different regions and industries having unique insurance needs. MGAs can help to develop insurance products that are tailored to these specific needs.

The introduction of insurance Managing General Agents (MGAs) can benefit various areas in India, including:

  1. Rural and under-served areas: Insurance MGAs can help extend insurance coverage to rural and under-served areas in India, where traditional insurance companies have limited presence due to a lack of infrastructure and resources. By partnering with local agents and brokers, MGAs can provide tailored insurance products that meet the specific needs of these communities.

  2. Niche markets: Insurance MGAs can also cater to niche markets such as small and medium-sized enterprises (SMEs), startups, and high-net-worth individuals (HNIs). These markets often require specialized insurance coverage, which traditional insurers may not offer due to their standard product offerings. MGAs can provide customized solutions that cater to the unique needs of these markets.

  3. Insurtech startups: Insurance MGAs can collaborate with insurtech startups that are using technology to disrupt the traditional insurance industry. By partnering with MGAs, insurtech startups can leverage their distribution networks and expertise in underwriting and claims management.

Technology can be a significant advantage for insurance MGAs in India in several ways:

  1. Distribution: Technology can help insurance MGAs reach a broader audience by using digital channels such as mobile apps, websites, and social media to market and sell their products. This approach can help reduce distribution costs and make insurance more accessible to consumers.

  2. Underwriting: Technology can help insurance MGAs improve underwriting by using data analytics, machine learning, and artificial intelligence (AI) to assess risk and price policies more accurately. This approach can help reduce losses and improve profitability.

  3. Claims management: Technology can also help insurance MGAs streamline claims management by using automation and AI to process claims more efficiently. This approach can help reduce claim processing times and improve customer satisfaction.

Overall, the introduction of insurance MGAs in India, coupled with technology, can help improve access to insurance, enhance underwriting and claims management, and cater to niche markets and insurtech startups. 

The insurance industry in India has significant potential for growth, but insurance penetration remains low. One way to improve insurance penetration in India is using Managing General Agents (MGAs). 

MGAs can help to level the playing field for smaller insurers and provide more targeted insurance products. By leveraging the potential of MGAs, India can unlock the full potential of its insurance market.

Author: Tarun Kumar Singh – Founder, Finexure Consulting

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of IIA and IIA does not assume any responsibility or liability for the same.

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