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MGAs, Underwriting Power, and the Capability Gap India Must Confront
- Protector IQ
- Dec 29, 2025
- 4 min read
The Insurance Bill, 2024–25 has proposed the formal recognition of Managing General Agents (MGAs) as a regulated category within India’s insurance ecosystem. While this signals intent to allow delegated underwriting and program-based insurance models, detailed operational guidelines from IRDAI — covering scope of authority, governance norms, and risk controls — are still awaited.
As with any structural change in insurance, the impact will ultimately depend not just on legislation, but on how prudently the framework is implemented.
MGAs and Underwriting Capability in India’s Insurance Sector
India’s insurance innovation problem was never distribution
India has no shortage of insurance sellers.
We have:
One of the world’s largest agent networks
Brokers with impressive reach across corporate and retail segments
Digital platforms capable of embedding insurance anywhere
Yet product innovation has remained slow, uneven, and fragile.
Why?
The constraint was not creativity. It was capability.
The real constraint: risk and regulatory depth
India’s insurance industry has long faced a shortage of professionals who simultaneously understand risk behaviour and regulatory boundaries well enough to design new products with confidence.
As a result:
Product design remained centralised and cautious
Innovation was limited to incremental tweaks on familiar covers
Truly new ideas were either deferred, diluted, or never introduced
Companies understandably gravitated toward products with predictable experience rather than experimenting with structures where loss behaviour, claims interpretation, or regulatory scrutiny was uncertain.
This wasn’t inertia. It was risk aversion driven by limited underwriting depth.
Why many “innovative” offerings struggled to land
Several attempts at innovation faltered for similar reasons:
Overseas product templates were imported without adapting to Indian regulations
Customer behaviour assumptions did not match Indian operating realities
Claims mechanics broke down under local interpretation
Insurance products do not fail at launch. They fail at claims.
And claims expose gaps in:
Risk understanding
Policy wording discipline
Regulatory alignment
Customer expectation management
Innovation struggled not because ideas were weak—but because the people authorised to execute them lacked proximity to both risk and regulation.
What MGAs really change
Globally, MGAs exist for a specific reason: to localise underwriting without compromising balance-sheet discipline.
An MGA is trusted to:
Design products for a clearly defined risk segment
Set underwriting rules within pre-agreed limits
Bind and issue policies on the insurer’s paper
Monitor performance in real time
The insurer retains capital risk. The MGA carries underwriting responsibility.
That distinction matters.
Because once underwriting responsibility is delegated, mistakes stop being theoretical.
They show up as:
Loss ratios
Claims disputes
Audit observations
Regulatory questions
This is not an extension of sales. It is a transfer of accountability.
Why this is particularly relevant for India
India’s risk landscape is not homogeneous.
SMEs do not behave like corporates. Livelihood risks do not resemble salaried retail books. Climate volatility does not respect historical actuarial comfort zones.
Centralised underwriting struggles to absorb this diversity.
MGAs allow insurers to:
Enter niche or fragmented segments
Partner with domain-specific risk specialists
Run controlled programs without rebuilding internal teams
But only if those MGAs bring real underwriting depth.
The uncomfortable capability gap
This is where the market needs to be honest.
Most brokers and intermediaries in India are built to sell insurance, not to construct it.
They hire for:
Sales
Relationships
Distribution scale
Very few have teams experienced in:
Product architecture
Underwriting rule design
Loss behaviour analysis
Regulatory interpretation at the product level
This is not a criticism. It is a reflection of how the industry evolved. But MGAs demand a different skillset altogether.
Delegated underwriting cannot be learned on the job through volume. Errors surface quickly—and publicly.
Why enthusiasm will not substitute expertise
Capital will flow into MGAs. Technology will promise speed. Distribution will be abundant.
None of these replace underwriting judgement.
In an MGA model:
Pricing discipline matters more than growth
Product clarity matters more than coverage breadth
Governance matters more than reach
Without this, the risk is not just commercial failure. It is regulatory retrenchment.
History shows that poorly governed innovation often invites tighter controls.
What sustainable MGAs will get right
The MGAs that endure in India will likely:
Start with narrow, well-understood risk segments
Invest deeply in underwriting and claims logic
Treat regulation as a design constraint, not an obstacle
Build trust with insurers before chasing scale
This is slower. It is also safer.
And ultimately, more valuable.
A structural shift, not a cosmetic one
The Insurance Bill has opened a door. It has not guaranteed success.
MGAs will succeed not because they exist—but because they earn the right to underwrite. That right will belong to those who understand risk deeply enough to carry responsibility, not just opportunity.
It is also important to recognise that MGAs, as a concept, will take shape in India only once regulatory guidelines are notified and tested in practice. Delegated underwriting is not a switch that can be turned on overnight.
The transition will require careful calibration — by insurers, intermediaries, and regulators alike — to ensure innovation does not outpace governance.
About Protector IQ
Protector IQ works at the intersection of insurance product design, underwriting logic, and system readiness—supporting insurers, intermediaries, and ecosystem partners as they navigate new models responsibly and sustainably.
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