Insurance Distribution Channels
Insurance products in India are distributed through a multi-channel framework to ensure wide accessibility across urban and rural regions. This approach combines traditional intermediaries, institutional networks, digital platforms, and specialized last-mile initiatives. Each channel follows a distinct operating model and targets specific customer segments.
Individual Agents
Individual or exclusive agents are the most widespread distribution channel, particularly in life insurance. They represent an insurer, solicit and service policies, and are compensated through commissions. Agents must undergo mandatory training and licensing, follow a code of conduct, and generally represent one life insurer (and at most one general and one health insurer). Their local presence and personal trust are critical in selling long-term insurance products. For examinations, note that new agents require at least 50 hours of training and periodic license renewal.
Corporate Agents (Bancassurance)
Corporate agents are institutions such as banks, NBFCs, post offices, or large corporates licensed to distribute insurance. Bancassurance, where banks sell insurance, is the most prominent form. Banks leverage their extensive customer base and branch network to cross-sell insurance. Regulations now allow banks to tie up with up to three insurers in each category—life, general, and health. This channel contributes significantly to new premium generation, especially for private insurers, and is regulated to ensure fair sales practices.
Insurance Brokers
Insurance brokers act on behalf of customers rather than insurers. They can arrange policies from multiple insurers and are expected to provide unbiased advice tailored to client needs. Brokers are particularly important in commercial and complex insurance, including corporate covers and reinsurance. They earn brokerage from insurers but have a fiduciary duty to clients. Brokers must meet capital requirements and are licensed under different categories such as direct, reinsurance, and composite brokers. Unlike agents, brokers assist extensively with claims and risk management.
Web Aggregators and Online Platforms
Digital channels have expanded rapidly with the rise of online insurance purchases. Web aggregators provide comparison platforms where customers can evaluate products and premiums across insurers and buy policies directly. Insurers also sell policies through their own websites and mobile applications, known as the direct digital channel. Online sales are especially popular for standardized products like term life, health, motor, and travel insurance, offering cost efficiency and convenience for tech-savvy consumers.
Point of Sale (PoS) Persons
PoS persons are a simplified form of agents introduced to widen insurance reach. They require minimal education and short-duration training and are permitted to sell only pre-approved, simple, standardized insurance products. These include basic life, personal accident, motor third-party, and travel insurance. PoS persons operate under insurers or intermediaries who are responsible for their compliance. This model enhances access in semi-urban and rural areas where traditional agent networks are limited.
Bima Vahak
Bima Vahak is a recent initiative aimed at strengthening last-mile insurance delivery in rural India. It envisages trained women from local communities acting as insurance facilitators at the village level, with at least one Bima Vahak per Gram Panchayat. They educate households, sell simple insurance products, assist with documentation, and support claims. The focus is on composite products designed for rural needs, and the initiative promotes both insurance inclusion and women’s empowerment.
Bima Sugam
Bima Sugam is a proposed unified digital insurance marketplace designed to integrate all insurers and products on a single platform. It aims to enable comparison, purchase, servicing, and claims across life, health, and general insurance through one portal. Key features include an electronic insurance account for each customer to store all policies digitally and seamless integration with KYC and payment systems. Planned to be rolled out in phases, it represents a cornerstone of the regulator’s digital and transparency-focused strategy.
Other Supporting Channels
In addition to the major channels, insurers also use direct sales teams for group and corporate business, Insurance Marketing Firms that offer multiple financial products under one roof, and Common Service Centres that distribute rural-oriented insurance products through e-governance kiosks. Together, these channels complement the core distribution framework and support broader insurance penetration.