Key Takeaways
- Composite brokers: Offer both insurance and reinsurance, built for complex multinational risks
- Direct brokers: Focused on insurance, deliver sharper specialization and efficiency
- Direct brokers operate with lower costs, keeping focus on health benefits and claims
- Loop’s direct broker model integrates prevention, protection, and care for stronger employee health outcomes
Why Broker Choice Matters Now
India’s corporate health insurance market has surged to USD 15 billion in 2024, with premiums reaching ₹37,528 crores. Yet penetration stands at just 3.7%. This gap signals both opportunity and risk: companies that choose the wrong broker risk higher claims ratios, frustrated employees, and avoidable costs.
For HR and CFO leaders, the broker decision is not just about premiums. It influences employee satisfaction, claims efficiency, compliance, and ultimately, the health outcomes of the workforce.
With IRDAI’s regulatory reforms and the industry’s digital shift, choosing between composite and direct brokers is more consequential than ever.
And as the Insurance Brokers Association of India highlights, four out of five companies switch brokers primarily due to service failures, not cost.
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The Regulatory Divide
Composite brokers
Composite brokers represent the broadest licensing category under IRDAI. With a ₹5 crore capital requirement, they are empowered to handle both insurance and reinsurance. This makes them a natural fit for multinational corporations with global operations, or for self-funded companies that need reinsurance to manage large risk pools.
Their capabilities include:
- Placing insurance domestically and internationally
- Managing multi-country risk structures
- Offering reinsurance expertise
But this breadth has a cost. Composite brokers face stringent compliance requirements (internal audits, expanded reporting), driving operating cost ratios up to 18–22% of premium.
Direct brokers
By contrast, direct brokers operate on a smaller regulatory footprint. They require just ₹75 lakh in capital and are limited to direct insurance within India. Licenses can cover life, general, or both, giving them flexibility to build niche expertise.
The result is sharper specialization, particularly in employee health benefits and leaner operations. Direct brokers typically run with 12–15% operating costs. IRDAI’s data also shows how demand is shifting: in 2021–22 alone, 74 new direct brokers were registered, compared to just one composite broker.
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Service capabilities that set them apart
Technology is where differences often become visible.
Composite brokers invest heavily (3–5% of revenue) in wide-ranging platforms that handle everything from global placements to advanced risk modeling. For large, complex enterprises, this scale is valuable, but often irrelevant to companies with purely domestic needs.
Direct brokers, on the other hand, focus their 1–2% tech spend on what matters most to employees and HR teams.
Platforms like Loop prioritize claims experience, mobile-first engagement, and HR dashboards. This focused approach pays off: ICICI Lombard reports that 99.3% of policies are now issued digitally, and newer direct brokers are achieving 40% faster claims settlements thanks to sharper digital tools.
The difference becomes most obvious at the point of claims. For employees, this is the “moment of truth.” Direct brokers’ dedicated health claims teams often outperform composites, however while composites bring breadth across multiple insurance lines, they may lack the depth in health-specific claims handling that corporates value most.
Cost considerations: where efficiency shows up
Commission structures are standardized by IRDAI. Group health insurance commissions are capped at 7.5%, while individual policies can go up to 15%. That means companies won’t pay more or less in commission simply by choosing one broker type over the other.
The difference lies in operations.
- Direct brokers: streamlined operations, lower compliance burden, cost ratios of 12–15%.
- Composite brokers: added complexity from reinsurance and global structures, cost ratios of 18–22%.
For Indian companies with fewer than 1,000 employees, many of the services baked into a composite broker’s model (like reinsurance or international placement) are simply unused, but still factored into fees.
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Decision framework for CFOs & HR leaders
Choosing between composite and direct shouldn’t start with theory. It should start with your company’s actual needs.
Companies usually benefit more from direct brokers who prioritize claims efficiency, wellness integration, and responsive service. Composites make sense only when the business expands across countries, manages self-funded plans, or requires complex multi-line insurance programs.
When evaluating brokers, leaders should weigh:
- Service quality: SLAs, responsiveness, and client references.
- Digital capabilities: employee self-service apps, claims tracking, wellness features.
- Claims advocacy: dedicated resources, settlement times, escalation processes.
- Wellness integration: preventive care and primary care support.
- Cost transparency: clarity on fees and exclusions.
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Frequently Asked Questions
- Should a growing company start with direct or composite brokers?
Direct brokers align best until you reach the scale of global operations or need reinsurance. Transitioning usually happens once a company crosses 2,000+ employees across multiple geographies.
- How do regulatory changes affect broker choice?
IRDAI’s reforms, like sandbox frameworks and faster approvals, benefit both, but direct brokers tend to adapt faster due to simpler operations.
- What ROI should we expect from switching brokers?
Well-managed broker transitions typically deliver better ROI through optimized premiums, time savings, and improved employee satisfaction. With direct brokers, ROI tends to come faster thanks to lower fees and stronger service alignment.
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Loop’s distinctive direct broker model
Loop operates under an IRDAI Direct Broker license (IRDAI/DB970/2022). Today, it serves 1,250+ companies and 900,000+ employees, with over ₹500 crores in claims processed in the last year.
What sets Loop apart is its Prevention + Protection + Care model:
- Prevention: 24/7 in-house medical advisors, chronic condition management, proactive screenings.
- Protection: Seamless insurance coverage and claims support.
- Care: Always-on primary care and access to specialists offering free, unlimited consultations to Loop members.
The digital-first platform gives HR teams dashboards and employees mobile-first health access. Clients report:
- Faster claims processing
- Higher employee app adoption
- Improved preventive care utilization
- Reduction in health costs through prevention-first programs.
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Make your broker decision with confidence
Composite brokers provide breadth and reinsurance depth, but most Indian companies don’t need that level of complexity.
Direct brokers, especially those like Loop who pair insurance with preventive healthcare, deliver sharper value by reducing costs, streamlining operations, and improving workforce health outcomes.
For CFOs and HR leaders, the takeaway is simple: focus less on theoretical breadth and more on proven service, digital capabilities, and preventive health integration.
If you’re evaluating group health insurance brokers, Loop’s prevention-first direct broker model is designed to help you save costs, improve outcomes, and strengthen your workforce advantage.
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