Insurance agent

What is an insurance agent?

An insurance agent is an individual appointed by an insurance company to find customers, explain and sell its policies, and help those customers with renewals, servicing and claims. In India the agent acts for the insurer, not for the customer, and is paid mainly by commission on the premiums of the policies sold. The appointment is made under Section 42 of the Insurance Act, 1938 and the IRDAI (Appointment of Insurance Agents) Regulations, 2016.

Agents are the largest sales force in Indian insurance. IRDAI's annual report for 2024-25 counted about 31.23 lakh individual agents, and agents brought in 49.44% of individual new business premium in life insurance that year, as reported by Outlook Money.

How agent appointment works in India

Since 2015 the insurer, not IRDAI, appoints the agent. The process under the 2016 regulations runs roughly like this:

1. The applicant applies to the insurer's designated official with PAN, age proof and education proof. The applicant must be at least 18.
2. The applicant completes pre-recruitment training and passes the agency examination conducted by an IRDAI-recognised examination body (see IC-38 and agent licensing).
3. The insurer checks IRDAI's central list of agents and the blacklist, using PAN, so that the person does not already hold a conflicting appointment.
4. If the applicant is found fit, the insurer issues an appointment letter, an agency code and an identity card, and uploads the record to IRDAI's agency portal.

Each insurer sets its own rules for age, minimum qualification, training hours, minimum business and renewal commission in a board-approved agency policy. The regulations suggest a Class 10 pass as the minimum qualification and at least 25 hours of practical training.

An individual can be a composite agent, appointed by more than one insurer, but only one life insurer, one general insurer, one health insurer and one of each mono-line insurer (such as an agriculture insurer). An agent cannot sell competing products of two life insurers. This closed structure is often called "tied agency".

The regulations also set a code of conduct. Among other things, the agent must show the identity card, disclose the commission if the prospect asks, advise on nomination, report material facts about the proposer to the insurer, and help with claims. The agent must not induce a customer to hide information, offer rebates or terms the insurer does not offer, or push a customer to drop an existing policy to buy a new one. The insurer is legally responsible for its agents' conduct.

Recent and proposed changes (2025 to 2026)

• The 2025 amendment. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, in force from 5 February 2026 except one section, added Section 40(2A) to the Insurance Act. It lets IRDAI set, by regulation, limits on commission and rewards paid to agents and intermediaries, and the disclosures that go with them. It did not open up agency to multiple insurers in the same line.
• The September 2026 consultation paper. IRDAI's paper "Recalibrating Economics of Insurance Distribution" (comments due 25 October 2026) proposes folding nine kinds of individual sellers into four categories of Insurance Distribution Persons, with "insurance agents" engaged by insurers as one of them. Agents would stay closed architecture, one insurer per non-competing segment, but would get higher commission caps than open architecture entities. It also proposes suitability analysis before every sale, commission clawback on mis-sold policies, and public records of mis-selling tagged to the individual seller. These are proposals, not rules.

What an insurance agent means for distribution

• Agents are a recruiting and retention business. A large share of appointed agents produce little after their first year. Most agency leaders track agent activation (share of agents selling at least one policy in a period), agent productivity and agent attrition rather than headcount.
• Public and private insurers use agents differently. In 2024-25, agents produced about 94% of individual new business premium for the public sector life insurer, and under a quarter for private life insurers, which lean on banks. A private insurer building agency is building against an established LIC agency culture in most towns.
• Commission is under pressure. After individual life and health policies became exempt from GST on 22 September 2025, insurers lost input tax credit on commission and many private life insurers cut distributor payouts from 1 October 2025, as reported in the press. The consultation paper's proposed caps, if adopted, would reset agency pay again. Agency leaders should model how renewal-heavy pay and persistency escalators would change an agent's income curve.
• Persistency is the agent's real asset. Renewal commission, insurer contests and recognition such as MDRT depend on policies staying in force. Good managers review an agent's 13th month lapses together with new business, not after it.
• Conduct risk sits with the insurer. Because the insurer is liable for every agent, compliance checks such as welcome calls, need analysis forms and recorded disclosures are part of the agency operating model, not an add-on.

Insurance agent vs POSP vs specified person