While Managing General Agents (MGAs) are being recognised as a useful innovation tool in less developed insurance markets, they are currently not eligible to operate in India, according to Global Insurance Law Connect (GILC), the network of specialist insurance law firms.
However, the Indian insurance regulator is examining the scope of MGAs in the Indian market and there could be the potential for an opening for MGAs in the future, GILC says in the report, “Innovation Abounds: Opportunities for Growth in the Global MGA Market”.
Mr Sakate Khaitan, partner at Khaitan Legal Associates in India, commented, “It is expected that once the regulatory environment is created for MGAs in India, some of the current insurance intermediaries, who as of now are only allowed to focus on distribution, may have a bigger role to play in the scheme of things, revolving around product development and underwriting expertise for specific business segments.”
While future regulatory changes are possible, there is no clarity to date as to whether the regulator will ultimately permit MGAs to set up operations in the country.
However, MGAs are eligible to register as International Financial Services Centre Insurance Offices (IIOs) in the Gujarat International Finance Tec-City (GIFT City) under the IFSCA (Registration of Insurance Business) Regulations, 2021.
Under these regulations, an MGA who has a valid binding agreement with a specific foreign (re)insurer is eligible to apply for registration as an IIO with the IFSCA and, if granted the certificate of registration to operate as an IIO, is required to comply with all regulations applicable to an IIO.