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A. Introduction
With the statutory recognition of Managing General Agents ("MGAs") under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act 2025 ("2025 Amendment"), there has been renewed discussion in India on whether delegated authority arrangements, particularly in relation to underwriting and claims handling, can be implemented within the existing framework governing Insurers and insurance intermediaries. This discussion has been reflected in recent press reports and market commentary for some time now, and remains a topic of debate in the industry.
A Managing General Agent ("MGA") is an insurance intermediary that operates under a delegated authority arrangement with an Insurer or Reinsurer (referred to as the "capacity provider"). Under such arrangements, the capacity appoints the MGA to perform certain underwriting (and, where agreed, claims handling) functions on its behalf, subject to agreed limits. The MGA may therefore bind the capacity provider to insurance and reinsurance contracts, but the risk and contractual obligations remain with the capacity provider.
MGAs are typically used in specialist or emerging lines (for example, cyber, aviation and M&A insurance), where underwriting requires dedicated technical expertise. The model is more prevalent in more mature markets such as the United Kingdom and Australia, where capacity providers use MGAs to access underwriting and distribution capability without building full-scale operational infrastructure in niche segments.
The Indian insurance framework has historically maintained a clear allocation between Insurance Companies and insurance intermediaries. Insurance Companies are permitted to carry on insurance business (including underwriting policies, assuming insurance risk and settling claims), whilst insurance intermediaries are generally limited to solicitation and distribution activities. The MGA model, which involves delegated authority in respect of underwriting (and, in some structures, claims handling), has therefore remained largely outside the Indian insurance framework.
Though the MGA model was referenced intermittently in Parliamentary discussions in the early 2000s, MGAs were first formally recognised in GIFT City in 2021 when the International Financial Services Centres Authority ("IFSCA") allowed MGAs to set up in GIFT City. Statutory recognition in India's principal insurance legislation followed only through the recent introduction of the 2025 Amendment. These amended provisions are yet to be brought into force, and would require regulatory changes to avoid conflicts with existing provisions, particularly those governing Insurance Companies in the Domestic Tariff Area ("DTA") regime.
This article analyses the statutory position emerging under the Insurance Act 1938 ("Insurance Act") pursuant to the 2025 Amendment, and the corresponding positions under both the IRDAI and IFSCA frameworks.
B. Legislative History and Regulatory Evolution
Parliamentary Discussions
MGAs have appeared intermittently in Parliamentary discussions on insurance sector reforms, including in debates around the Insurance (Amendment) Bill 2002 and in connection with the introduction of "intermediaries" under the IRDA Act1. These discussions reflected a degree of caution, including concerns recorded in the 25th Report of the Standing Committee on Finance (2002–2003)2. Beyond this, MGAs were not a notable feature of the major amendment cycles to the Insurance Act in 2015 and 2021.
Recent developments and recognition
The discussions regarding MGAs re-emerged in 2023, when press reports indicated that the IRDAI was actively considering MGAs as a possible new category of licence within the Indian insurance framework3. In addition, the 66th Report of the Standing Committee on Finance (2023–24)4, examining the performance review and regulation in the insurance sector, noted in the Minutes of its 23rd Sitting that the Committee deliberated upon various issues, including the "importance of data rails and Managing General Agents (MGA)".
Against this backdrop, MGAs were, for the first time, proposed to be expressly recognised as "insurance intermediaries" under the 2024 Bill, which was released for public consultation. The proposal was subsequently carried forward, with certain refinements, into the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill 2025, which was introduced in Parliament and ultimately passed by both Houses. Certain additional steps will be required to operationalise the MGA model in the DTA regime, as briefly analysed below.
C. Anticipated Regulatory Changes in India
While no formal guidance is presently available regarding the precise scope of regulatory changes that may be introduced, the following developments are likely to be required once the 2025 Amendment is brought into force.
1. MGA-Specific Regulations: The IRDAI has historically followed a consistent approach of introducing enabling regulations for insurance intermediaries, setting out registration, governance, and operational requirements that applicants must satisfy in order to obtain and renew the relevant licence. In line with this approach, it is likely that the IRDAI will introduce an enabling regulatory framework for MGAs, addressing registration and operational requirements. Such regulations may address, inter alia, the following:
- Registration Requirements: Prescribed eligibility criteria for entities proposing to obtain registration as MGAs, including requirements relating to corporate form, minimum capital, fit and proper criteria for promoters and management, and professional indemnity insurance (if any).
- Scope of Delegated Authority: Parameters governing the extent to which Insurers and Reinsurers may delegate underwriting and claims settlement authority to MGAs. This may include limits on the classes of business eligible for delegation, monetary thresholds for individual risks or aggregate exposure, and restrictions on sub-delegation.
- Binding Agreements: Minimum requirements for binding agreements between Insurers and MGAs, including mandatory contractual provisions relating to delegation of authority, reporting obligations, audit and inspection rights, governance controls, and termination events.
- Policyholder Protection: Obligations aimed at safeguarding policyholders' interests, including disclosure requirements regarding the involvement of an MGA, mechanisms ensuring that policyholders retain direct recourse against the Insurer, and measures to ring-fence policyholder funds from the operational or financial risks of the MGA.
- Supervision and Reporting: Ongoing reporting and disclosure obligations applicable to both MGAs and insurers utilising MGA arrangements, together with audit requirements and supervisory mechanisms enabling regulatory oversight of delegated underwriting activities.
2. Amendments to Outsourcing Norms: A critical area that would require reconsideration is the existing regulatory framework governing outsourcing of activities by Indian insurance companies. Pursuant to ¶21.1(iv)(b) under Chapter III of the IRDAI's Master Circular on Operations and Allied Matters of Insurers of 19 June 2024 ("Operations Master Circular"), decision-making functions relating to underwriting and claims are expressly prohibited from being outsourced. This restriction would require reconsideration (or a specific carve-out) if MGAs are permitted to bind risk on a delegated authority basis in the DTA regime. Accordingly, the IRDAI will need to consider one of the following approaches:
- introducing an express carve-out for MGAs under the Operations Master Circular, permitting the delegation of underwriting and, where applicable, claims functions to registered MGAs, subject to specified safeguards and conditions; or
- amending the Operations Master Circular to draw a clearer distinction between general outsourcing of core insurance functions (which may continue to remain restricted) and the formal delegation of authority to regulated intermediaries such as MGAs.
3. Distribution and Commission Regulations: Another issue that will require regulatory clarity is the manner in which MGAs may be remunerated, particularly given that MGAs typically exercise underwriting judgement and incur operational costs beyond those associated with conventional distribution activities. While the IRDAI has historically exercised oversight over commission and remuneration payable to insurance agents and intermediaries, the 2025 Amendment has introduced §40(2A) of the Insurance Act, which expressly anchors such powers in the statute. This provision empowers the IRDAI, in the interests of policyholders, to prescribe limits on commission, remuneration, or rewards payable to insurance intermediaries, together with the manner of payment and applicable disclosure requirements. The manner in which this provision is applied to MGAs will be key to determining the commercial viability of the MGA model under the DTA regime.
D. Recognition under the IFSCA Regulatory Framework
In contrast to the DTA regime, MGAs have been expressly contemplated within the GIFT City framework since 2021 under the International Financial Services Centres Authority (Registration of Insurance Business) Regulations 2021 ("IIO Regulations"). Under the IIO Regulations, the provisions relating to MGAs and the relevant Foreign (Re)Insurer are set out in the Third Schedule.
The IIO Regulations contemplate an MGA applying for registration as an IIO, and thus recognise them as such5. The framework defines an "MGA" to include a body corporate incorporated outside India or a company incorporated under the Companies Act 2013, in each case operating under a binding agreement with a Foreign (Re)Insurer. This binding agreement is required to specify, inter alia, the scope of underwriting and (where applicable) claims authority to be exercised by the MGA, together with governance and oversight mechanisms. The Third Schedule also prescribes a minimum paid-up equity capital requirement of ₹5 lakhs.
While the IIO Regulations have been in force since 2021 and multiple Insurers and Reinsurers (both Indian and overseas) have set up as an IIO, we note that no entity has so far, based on publicly available information as of the date of this article, been granted registration by the IFSCA to operate as an MGA IIO.
E. Impact of 2025 Amendment on the IFSCA Regulatory Framework
Certain provisions of the Insurance Act apply to entities carrying on insurance business in the IFSC, subject to any specific modifications or exemptions that may be notified for the IFSC framework. Accordingly, the statutory classification of MGAs under the Insurance Act is relevant when considering the IIO Regulations and any future recognition of MGA structures in GIFT City.
We note that the 2025 Amendment recognises MGAs as "insurance intermediaries" under the Insurance Act, whereas the IIO Regulations contemplate MGAs registering as IIOs. Accordingly, once the 2025 Amendment is brought into force, it remains to be seen whether:
- The Central Government will issue a notification under §2CA to create a carve-out for MGAs operating in GIFT City; or
- The IFSCA will amend the regulatory positioning of MGAs within the IFSC (including whether MGA structures would in the future be implemented through an IFSC Insurance Intermediary Office route).
F. Conclusion
While the statutory recognition of MGAs under the 2025 Amendment represents a significant evolution in India's insurance framework, the practical role of MGAs in India will depend on the commencement of the 2025 Amendment, and the operational framework issued by the two insurance regulatory bodies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Footnotes
1. The relevant extracts of the discussions are below:
a. Remarks by Shri Rupchand Pal in the 13th Lok Sabha Debate of 15 May 2002 are in the following terms:
"In the Malhotra Committee Report itself and also subsequently in the IRD Act. there has been provision for intermediaries. Who is an *intermediary'? 'Intermediary' is a rather vague sort of expression. There have been agents who are Intermediaries. There have been surveyors who are intermediaries. It is now proposed to have a third-party administrator. For example, in the case of a Mediclaim service, they would be dealing with the settlement of the claim and everything else. In the United States, they are known as 'MGA's - Managing General Agents. Nowadays, the Government hesitates to use the English expression 'broker'; but 'broker' is the appropriate term to be used here. In the name of intermediaries, actually the Government had even at that point of passing IRD Bill had in mind issue of allowing brokers. It seems that we have not learnt the lessons of the 1992 scam.
b. Remarks by Shri S. Viduthaum Virumbi in the Rajya Sabha Debate of 30 July 2002 are in the following terms:
"There is one system in the U.S.A., which is called the Managing General Agents System. Under the Managing General Agents System, the brokers themselves are collecting the premium, and they are deducting their commission from it.
They themselves will deduct the commission, what, they feel, is due to them, and the balance would be sent to the insurance companies. I want to know whether the Managing Agency System will be introduced by the IRDA here also. Once it comes, that may also come. There was a report, three years back, that four hundred billion dollars had lost because some insurance companies were declared bankrupt. That should not happen."
2. Extract from the Standing Committee on Finance, 25th Report (2002–2003) (General Insurance Business (Nationalisation) Amendment Bill, 2001):
"All India Insurance Employees' Association in the course of submissions placed a copy of the same on record and explained their view points about the dangers of using brokers which is similar to Managing General Agents for procuring business. Such practice has led to the bankruptcies, frauds and scandals in even developed countries like America.
(...) If the Brokers and Corporate Agents maintain their own bank accounts and are authorized it to deduct its commission and service charges, it will be disastrous for the nationalized sector which will be weakened. Such practices are similar to the system of Managing General Agents (MGAs) prevalent in the Insurance Industry in USA which is reported to have resulted in bankruptcies and scandals in that country."
3. Economic Times, "Managing General Agencies could be the new insurance play; regulator permitting" (22 June 2023), available at: https://economictimes.indiatimes.com/tech/technology/managed-general-agencies-could-be-the-new-insurance-play-regulator-permitting/articleshow/101112664.cms.
4. Standing Committee on Finance (2023–24), 66th Report (Performance Review of Insurance Sector):
""8. Thereafter, the Committee deliberated upon the following issues:
(i) Reasons and the possible solutions of insurance in the country especially in general insurance microinsurance, coverage of rural segment, capital adequacy, importance of data rails and Managing General Agents (MGA), need to rationalize GST on insurance services"
5. R3(1)(b)(viii) read with R3(1)(p) and the Third Schedule of the IIO Regulations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
