Brokers have increased their contribution to the insurance market, with their share of premiums doubling to over 35% from 17% over the last 10 years. On the other hand, individual and corporate agents have seen their share of premiums shrink over the same period.
The biggest driver of this shift has been motor insurance. Over the years, most auto companies have formed their own insurance broking firms, which enables their dealers to sell insurance policies of multiple companies. Earlier, dealers had corporate agencies. Online distributors like Policybazaar and Coverfox too have obtained insurance broking licences, reported Times of India.
According to recent IRDAI data, individual agents, who brought in 36% of the premium a decade ago, now generate 22%. Individual agents have retained this share because of third-party motor premiums and health insurance. Brokers and other institutional distributors focus on comprehensive or ‘own damage’ cover, which generates most of the premiums, and do not sell standalone third-party covers. If vehicle owners want to buy only the mandatory third-party cover, which is usually the case in old vehicles, they have to turn to individual agents.
There are 562 active insurance broking firms in India, of which 464 are direct brokers, 63 composite (insurance and reinsurance) brokers and five reinsurance brokers. Of the 1.45m point-of-sales persons, 660,000 are with insurance brokers.
