Reinsurance Broker Remuneration and Disclosure in India 2026: Treaty Brokerage, Facultative Placements, and the Transparency Push

Reinsurance broker remuneration works differently from direct broking, and the difference matters for every disclosure question that follows. On a brokered placement, brokerage is built into the transaction itself: the reinsurer pays the broker a percentage of the reinsurance premium, and that percentage is a stated term of the slip. The cedant does not write the broker a cheque, but the cedant bears the cost, because the reinsurer prices gross of brokerage.

This post is about that broker remuneration, distinct from ceding commission and profit commission, which flow between reinsurer and ceding insurer on proportional treaties. A single treaty can carry all three: a 25 to 32 percent ceding commission, a sliding-scale or fixed profit commission, and a brokerage percentage to the placing broker, each stated separately in the slip with different accounting and tax treatment.

Three structural features of RI brokerage set up the 2026 disclosure debate.

1. The slip states the rate, so the remuneration is documentable. Brokerage on a reinsurance placement is a written contract term visible to the reinsurer and, where the cedant asks, to the cedant.
2. The economics scale with premium, not effort. A 1 percent brokerage on a INR 400 crore proportional treaty and a 10 percent brokerage on a INR 12 crore catastrophe layer are both conventional, and the work content does not map neatly to either number.
3. Almost all reinsurance broking revenue sits above the thresholds regulators care about. A licensed reinsurance or composite broker with a working treaty book will typically clear INR 10 crore of annual brokerage income, the level at which the draft 2026 intermediary rules propose stricter disclosure.

Treaty brokerage in the Indian market follows conventions inherited from the London and international markets, adjusted for the fact that a large share of Indian premium is placed with GIC Re, foreign reinsurance branches (FRBs), and IFSC insurance offices where terms are negotiated placement by placement. The figures below are indicative market conventions, not regulatory rates.

On proportional treaties (quota share and surplus), brokerage typically runs at 1 to 2.5 percent of ceded premium. The percentage looks small but applies to the full ceded premium, so a INR 500 crore ceded programme at 1.5 percent produces INR 7.5 crore of brokerage. Because proportional treaties also carry ceding commission of 25 to 32 percent, cedants increasingly scrutinise the total frictional cost of the structure and ask whether the brokerage reflects placement difficulty or legacy terms rolled forward.

On non-proportional treaties (risk and catastrophe excess of loss), brokerage conventionally runs at around 10 percent of the minimum and deposit premium, adjusting on reinstatement and adjustment calculations. The higher percentage reflects the structuring work: layer design, exposure modelling, syndication across multiple reinsurers, and the annual negotiation of rates on line through hardening and softening cycles.

Two pressure points have emerged through FY2025-26 renewals.

• Cedant procurement discipline. Large Indian insurers now run structured broker reviews on treaty programmes, asking for brokerage terms up front and benchmarking across brokers. On the largest programmes, cedants have begun negotiating brokerage down or converting parts of the engagement to fixed fees for defined deliverables such as catastrophe modelling refreshes.
• Net-of-brokerage quoting by reinsurers. On capacity-constrained catastrophe layers some reinsurers quote net rates and leave the broker to agree remuneration separately, forcing the brokerage conversation into the open with the cedant.

Facultative reinsurance is where broker remuneration and direct-market economics intertwine most closely. On large Indian industrial risks (refineries, power plants, steel complexes, major infrastructure), the direct insurer frequently retains only a small share and places the balance facultatively, with a reinsurance broker or the composite broker's RI desk running the placement.

Facultative brokerage conventionally runs at 2.5 to 7.5 percent of the facultative premium, varying with placement difficulty and the number of markets approached. On distressed occupancies or capacity-scarce lines (chemical plants with poor loss records, standalone terrorism capacity, offshore energy), realised brokerage sits at the top of the band because the broker is genuinely manufacturing capacity across international markets.

The compliance sensitivities on facultative business are sharper than on treaty for three reasons.

1. Chain visibility. A single risk can involve a direct broker earning commission, a reinsurance broker earning facultative brokerage, and sometimes an overseas correspondent sharing that brokerage. The corporate client at the top rarely sees the full remuneration stack, and the 2026 transparency measures target exactly this opacity.
2. Order-of-preference compliance. The IRDAI (Re-insurance) Regulations, 2018 require cessions to follow an order of preference favouring Indian reinsurers and India-based capacity (GIC Re, FRBs, IFSC insurance offices) before cross-border reinsurers. Brokers must document the offer sequence, and remuneration cannot be the reason a placement bypasses the preference order.
3. Cross-border tax and GST mechanics. Brokerage on cessions to cross-border reinsurers raises GST and withholding questions that have seen dispute and regularisation in recent years; clean slip documentation of the brokerage term is the starting point for defensible tax positions.

Three instruments define the current rulebook.

The IRDAI (Insurance Brokers) Regulations, 2018 create the licence categories (direct, reinsurance, composite) with graded capital requirements, and impose the code of conduct governing remuneration behaviour: acting in the client's interest, disclosing conflicts, and disclosing remuneration on request. For a reinsurance broker the client is the cedant, so the disclosure obligation runs to the ceding insurer.

The IRDAI (Re-insurance) Regulations, 2018 govern the placement itself: cession limits, the order of preference across GIC Re, FRBs, IFSC insurance offices, and cross-border reinsurers, and programme filings with the regulator. They do not prescribe brokerage rates; brokerage is commercially negotiated, which is why market conventions rather than tariff tables govern the numbers.

The IRDAI (Payment of Commission) Regulations, 2023 and the IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024 sit mostly on the direct side: the 30 percent EOM ceiling for general insurers and 35 percent for standalone health insurers disciplines direct acquisition spend. But the EOM framework reaches reinsurance broking indirectly. An insurer squeezed on expenses looks harder at every cost line, including the frictional cost of its outward programme, so treaty renewals since FY2024-25 have featured more CFO-level attention on brokerage terms than the market was used to.

From 5 February 2026 the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 adds a statutory layer: perpetual intermediary licences, composite licences, 100 percent FDI in intermediaries, and restored statutory power for IRDAI to cap distributor commissions. That power is enabling rather than self-executing, but it means a future cap on reinsurance brokerage would need only subordinate regulation, not new legislation.

The formal disclosure baseline is modest: under the broker code of conduct, a broker must disclose its remuneration when the client asks, and the slip usually states brokerage in any case. What the baseline does not reach is the surrounding economics: brokerage sharing with overseas correspondent brokers, fees earned from reinsurers for portfolio services, facility income, and the terms on which the broker's group companies participate in the same programme.

Cedant practice has moved well ahead of the regulatory floor. Through FY2025-26, large Indian cedants have begun to demand, in broker service agreements or at renewal:

• Placement-level remuneration statements: brokerage by treaty and by facultative placement, including any sharing arrangements, delivered as a schedule at renewal.
• Conflict disclosure: whether the broker or its affiliates earn from reinsurers on the same programme through facilities, line-slip arrangements, or consulting mandates.
• Market-selection documentation: the offer and decline record across the order of preference, so the cedant can evidence its own compliance with the re-insurance regulations.
• Service-level commitments: closing timelines for slips and cover notes, claims collection performance on reinsurance recoveries, and premium and claims bordereaux discipline.

The driver is partly governance and partly economics: boards held to a 30 percent EOM standard on the direct side ask equivalent questions about outward spend. A broker who arrives at renewal with a clean remuneration schedule and a documented market-selection file is answering questions the cedant's board is already asking; a broker who treats brokerage as private information is creating next year's procurement problem.

Two 2026 developments, both still proposals, would move reinsurance broker remuneration from ask-and-disclose to published-by-default.

The first is the draft IRDAI (Insurance Intermediaries) (Amendment) Regulations, 2026, released for comment in June 2026. As drafted, intermediaries would disclose intermediation revenue and other income received from insurers in a separate schedule to their financial statements, file audited financials with IRDAI by 30 September each year, and publish them on their websites, with stricter disclosure requirements above INR 10 crore of commission income. Reinsurance and composite brokers sit almost entirely above that threshold. If notified in this form, the split of a broker's revenue between direct commission, reinsurance brokerage, and other insurer-sourced income becomes public information that cedants, competitors, and journalists can read.

The second is the commission-rules overhaul IRDAI signalled in early July 2026, with a consultation paper expected by end July per Chairperson Ajay Seth. The reported themes are retail: staggered or trail commission instead of upfront payouts that reach around 40 percent on some life and health products, effort-based remuneration paying more for advisory, documentation, and claims servicing, possible caps by product type, tenure, and complexity, and tighter disclosure. Reinsurance broking is not the stated target, but the logic travels, and once a disclosure architecture exists for direct intermediaries it is administratively simple to extend to reinsurance placements.

The realistic FY2026-27 planning assumption is not capped brokerage rates, but that every rupee of reinsurance broking revenue becomes attributable, auditable, and visible to cedants.

The practices comfortable under a published-disclosure regime will be those that treat the next twelve months as preparation time. Five workstreams matter.

1. Reconcile the slip record to the revenue ledger. Every brokerage percentage on every live slip should tie to booked revenue, with differences (adjustment premiums, reinstatement premiums, cancellations, sharing with correspondents) explained. The draft rules would put audited revenue schedules in public view; reconciliation gaps that are routine today become explanation problems then.
2. Paper the sharing arrangements. Brokerage splits with overseas correspondents and group entities need written agreements with defensible allocation logic, for the disclosure schedules and for transfer-pricing and GST purposes.
3. Standardise cedant remuneration statements. Build the placement-level schedule as a standard renewal deliverable rather than waiting for each cedant to ask. Brokers who did this in FY2025-26 report shorter procurement cycles, not rate pressure, because it removed the suspicion discount.
4. Segment revenue by effort profile. If effort-based principles migrate into intermediary rules, brokers who can show the analytical and structuring content behind non-proportional and facultative brokerage will defend those rates best. Time-recording on major placements, modelling deliverables, and market-approach logs are the evidence base.
5. Fix the tax posture now. GST on brokerage, withholding on cross-border flows, and the characterisation of fees from reinsurers should be reviewed against the disclosure that is coming, because published schedules will be read by tax authorities as well as cedants.

Indian reinsurance broking has grown on relationships and placement skill; neither is threatened by transparency. What changes in 2026 is that remuneration moves onto the record, and the brokers who put it there themselves, cleanly and first, will set the benchmark for the market.