Insurance industry has been witnessing significant traction especially in general insurance with significant uptake in health cover followed by the motor segment. The focus has been shifting towards insurance for all by 2047 with improvement in corporate governance and customer protection. As distribution plays a key role in this regard, businessline spoke to Narendra Kumar Bharindwal, President, Insurance Brokers Association of India (IBAI). Some excerpts:
What is your view on the current state of insurance industry and contribution of the brokers in the current growth phase?
Brokers are a vital component of India’s insurance distribution ecosystem. Of the ₹3.07 lakh crore of general insurance premium underwritten last year, brokers contributed approximately 38 to 40 per cent. This underscores our role as a significant stakeholder in the industry’s growth and in enhancing insurance penetration across the country. The brokerage community is diverse—comprising corporate brokers, SME-focused brokers, online brokers and POSPs each operating with distinct business models and making unique contributions to the sector. Insurance broking was formally introduced in 2002. From just a few hundred brokers initially, we have grown to over 750 today. It’s noteworthy that 100 per cent FDI was first permitted in the broking segment before it was extended to insurance companies. Post-detariffication in 2007, product innovation has surged—particularly in Motor and health, and the role brokers played in facilitating this shift deserves acknowledgment.
What would you recommend to strengthen distribution further?
Innovation is the key. Today, nearly 70 per cent of general insurance business stems from just two lines – health and motor. While there has been considerable product development in both—especially post-COVID in health insurance challenges remain. Despite the industry’s commendable settlement of ₹89,000 crore in health claims, there exists a trust deficit. One of the causes is unexplained deductions under the clause of “Reasonable and Customary Charges” (RNC). Benchmarking among hospitals is lacking, and this inconsistency often places the policyholder in a difficult position. On the motor side, innovations like Return-to-Invoice and road tax covers have added significant value. Today, with the right premium, a consumer can essentially secure a 360-degree cover.
There have been some concerns over mis-selling in insurance, what is your take on this issue?
While there have been instances in the past where mis-selling contributed to customer dissatisfaction, it is important to acknowledge that the industry has evolved significantly in recent years. The root of the trust deficit may not always lie in intentional mis-selling, but often in an expectation-versus-delivery gap a disconnect between what customers believe they are buying and what the policy actually delivers. The industry has been taking proactive steps to address these concerns, including recording of all calls, no claim bonus verification through the IIB portal. These initiatives reinforce transparency and help mitigate the risk of miscommunication or unintentional mis-selling. It is therefore more appropriate today to view the trust deficit not just through the lens of mis-selling, but also through customer awareness, product complexity and the importance of informed advice. As intermediaries and stakeholders, we all have a collective responsibility to bridge this gap through better communication, simplified products and continued trust-building measures.
Q. There has been concern about the increase in health insurance premiums. How is that impacting distribution?
Premium increases are closely linked to claim ratios and medical inflation. The onboarding cost for new business is higher, while renewal commissions are significantly lower. This impacts profitability, especially in the corporate health space where margins are very low. Hospital and technology-driven medical inflation is another major factor. The cost of healthcare is rising, and so are the claims. As brokers, we face increasing competition.
Looking ahead, what major changes do you foresee in insurance broking? Is there any wish list?
We’ve long advocated for perpetual licenses for brokers to provide continuity and reduce regulatory uncertainty. We are hopeful this will be incorporated in the upcoming amendments to the Insurance Act. The risk landscape has been evolving. With increased infrastructure investment, liability and cyber insurance are gaining traction. Brokers will serve as key knowledge partners in these segments. Then there is corporate governance and risk management . SEBI’s LODR guidelines mandate risk management committees for top 1,000 listed companies. We believe these committees should evaluate insurance adequacy, not just statutory coverages, but do a 360-degree review of risk exposure material damage, transit, employee, various liabilities among others. Independent Certification: For all companies not listed and with over ₹50 crore in debt exposure, a risk audit on insurance coverage should be part of the statutory auditor’s report, certified by a professional. This will not only protect the entity but also enhance the security of lenders and promote good governance.
