{"id":4771,"date":"2021-05-03T08:59:13","date_gmt":"2021-05-03T08:59:13","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=4771"},"modified":"2021-05-03T09:02:40","modified_gmt":"2021-05-03T09:02:40","slug":"compliance-of-insurance-broker-under-irdai","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/compliance-of-insurance-broker-under-irdai\/","title":{"rendered":"A Complete Guide on the Compliance of Insurance Broker under IRDAI"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In\nthe present situation that we are living in, coverage of the information to the\nauthorities is a vital role of any organization or institution. In the\ninsurance business world, the requirement for compliance of insurance broker\nwith the regulations is essential due to the risks involved with it. So, to\nmake sure the better responsibility and transparency in the business of\ninsurance, the compliance of insurance broker is essential. In this blog, we\nare going to discuss in detail about the compliance of insurance broker.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3abbcd07eac\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3abbcd07eac\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/compliance-of-insurance-broker-under-irdai\/#Who_is_the_Insurance_Broker\" title=\"Who is\nthe Insurance Broker?\">Who is\nthe Insurance Broker?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/compliance-of-insurance-broker-under-irdai\/#Compliance_of_Insurance_Broker_for_allowance_of_Insurance_Broker_Registration\" title=\"Compliance\nof Insurance Broker for allowance of Insurance Broker Registration\">Compliance\nof Insurance Broker for allowance of Insurance Broker Registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/compliance-of-insurance-broker-under-irdai\/#What_are_the_Capital_Requirements_for_the_Insurance_Broker_License_%E2%80%93_Compliance_of_Insurance_Broker\" title=\"What\nare the Capital Requirements for the Insurance Broker License? &#8211; Compliance of\nInsurance Broker\">What\nare the Capital Requirements for the Insurance Broker License? &#8211; Compliance of\nInsurance Broker<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/compliance-of-insurance-broker-under-irdai\/#Risk_Management_Services\" title=\"Risk\nManagement Services\">Risk\nManagement Services<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/compliance-of-insurance-broker-under-irdai\/#Compliance_of_Insurance_Broker_regarding_the_Maintenance_of_Account_Books_Records\" title=\"Compliance\nof Insurance Broker regarding the Maintenance of Account Books, Records\">Compliance\nof Insurance Broker regarding the Maintenance of Account Books, Records<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/compliance-of-insurance-broker-under-irdai\/#Conclusion_for_the_Compliance_of_Insurance_Broker\" title=\"Conclusion for the Compliance of Insurance Broker\">Conclusion for the Compliance of Insurance Broker<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_is_the_Insurance_Broker\"><\/span>Who is\nthe Insurance Broker?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An\ninsurance broker is an individual or a person who sell their insurance items or\nproducts of various insurance companies to clients. They help the clients in\nfinding the perfect insurance policy as per their requirements and earn a\ncommission based on the number of insurance products sold. Unlike insurance\nagents, brokers have a massive volume of business as they deal with the\ninsurance products of different insurance companies and not a specific\ninsurance company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Compliance_of_Insurance_Broker_for_allowance_of_Insurance_Broker_Registration\"><\/span>Compliance\nof Insurance Broker for allowance of Insurance Broker Registration<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For the registration of an <a href=\"https:\/\/swaritadvisors.com\/insurance-broker-license\" class=\"text-primary\"><strong>Insurance Broker License<\/strong><\/a>:<\/p>\n\n\n\n<ol><li>An insurance broker is required\nto perform exclusively as authorized in the regulations for carrying on their\nbusiness;<\/li><li>The broker is needed to comply\nwith the IRDA provisions and any other guidelines issued by the authority;<\/li><li>The broker should address the\ncomplaint of their client within fourteen days of receipt of such complaint and\nmust also notify the authorities about it;<\/li><li>An insurance broker is not\npermitted to commence multi-level marketing for supplication and acquiring\ninsurance products;<\/li><li>The broker should obey the code\nof conduct and is required to maintain books of accounts;<\/li><li>It is the duty of an insurance\nbroker to notify the authority in case of any alteration in the information\nsubmitted or if any information submitted is deceptive or false;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Capital_Requirements_for_the_Insurance_Broker_License_%E2%80%93_Compliance_of_Insurance_Broker\"><\/span>What\nare the Capital Requirements for the Insurance Broker License? &#8211; Compliance of\nInsurance Broker<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An\napplicant proposes to become an insurance broker is required to have a minimum\npaid-up capital:<\/p>\n\n\n\n<ol><li>In case of Direct Broker: Rs.\n75 lakhs;<\/li><li>In case of Reinsurance Broker:\nRs. 4 crores;<\/li><li>In case of Composite Broker:\nRs. 5 crores.<\/li><\/ol>\n\n\n\n<p>In\nthe case of an entity limited by shares and cooperative society, the capital\nwill be in the form of equity shares. In the case of LLP or Limited Liability\nPartnership, the contribution from partners would be in cash only, and shares\nof an insurance broker held as contribution or capital shall not be guaranteed\nin any way in the case of Limited Liability Partnership or equivalent. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Risk_Management_Services\"><\/span>Risk\nManagement Services<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol><li>Insurance brokers can charge customer fees in lieu of their service to the customers for the risk management service or other similar services in accordance with the regulations, and the insurance broker may consider the activity for commercial risks only upon written confirmation from the customer;<\/li><li>In the case of shortage of resources and skills from an insurance broker for risk management services, then it may involve external consultants for the same;<\/li><li>&nbsp;Brokers are not allowed to receive compensation and reward under <strong>IRDAI Regulation<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Insurance_Regulatory_and_Development_Authority\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup>, 2016 and fees for similar risk management services;<\/li><li>The broker would be liable for all acts on the area of external experts;<\/li><li>The broker must keep all the details regarding the risk management services provided.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Compliance_of_Insurance_Broker_regarding_the_Maintenance_of_Account_Books_Records\"><\/span>Compliance\nof Insurance Broker regarding the Maintenance of Account Books, Records<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nbroker is required to maintain the following for each FY or Financial Year:<\/p>\n\n\n\n<ul><li>P&amp;L Account or Profit and\nLoss Account;<\/li><li>Any extra statement on the\nbroking business as per the requirement of the authority;<\/li><li>Statement of affairs or a\nbalance sheet at the conclusion of each accounting period;<\/li><li>A statement on fund flow or\ncash flow direct method.<\/li><\/ul>\n\n\n\n<p>As\nper the regulations, the accounts might be maintained on the basis of the\nfinancial period, and the accumulation shall be for twelve months.<\/p>\n\n\n\n<p>The\ninsurance broker needs to submit a copy of the audited financial statement with\nthe auditor\u2019s report to the authority. The time for such submission shall be\nwithin thirty days after holding a yearly meeting or by 30<sup>th<\/sup>\nSeptember of every year. If there is any shortage in the auditor&#8217;s report, then\nthe broker may, within ninety days from the auditor\u2019s report date, correct such\nshortages.<\/p>\n\n\n\n<p>The\nstatements, books or accounts, and documents shall be maintained at the head\noffice of the insurance broker or other branch offices. Such documents are\navailable on all working days to the officers of the authority for examination.\nSuch documents will be retained for the time of seven years; however, in case\nwherein claims are reported and where the court&#8217;s decision is pending, such\ndocuments should be maintained till the conclusion of cases.<\/p>\n\n\n\n<p>The\nbrokers shall deliver their financial statements concerning the transactions\nmade to it or by it. The auditor is needed to provide a certificate confirming\ncompliance regulations in the format provided in <strong><em>Schedule II-Form UA<\/em><\/strong>. The\nbrokers are required to submit the legislative auditor&#8217;s details and the\naudited accounts in accordance with <strong><em>Schedule II-Form V. <\/em><\/strong>The broker&#8217;s\nlegal auditors will be appointed for a constant period of a maximum of five\nyears.<\/p>\n\n\n\n<p>In\nthe case of remuneration and any other modes of payments to the insurance\nbroker go far the arranged limit, then the insurer can file a certificate as\nprovided in Schedule II-Form W with authority. The insurer&#8217;s CEO and CFO should\nsign it. Another equivalent certificate from the broker&#8217;s CFGO and officer\nshould file certifying it in the same form as provided above.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion_for_the_Compliance_of_Insurance_Broker\"><\/span>Conclusion for the Compliance of Insurance Broker<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Such regulations under the IRDAI (Insurance Regulatory and Development Authority) set the plan for the compliance of insurance broker that should be complied with strictly by the insurance brokers, and non-compliance with it may attract penalties.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/benefits-of-insurance-broker-license\/\">What are the Benefits of an Insurance Broker License? \u2013 An Overview<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In the present situation that we are living in, coverage of the information to the authorities is a vital role of any organization or institution. In the insurance business world, the requirement for compliance of insurance broker with the regulations is essential due to the risks involved with it. So, to make sure the better [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":4774,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[44],"tags":[622],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/4771"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=4771"}],"version-history":[{"count":12,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/4771\/revisions"}],"predecessor-version":[{"id":4786,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/4771\/revisions\/4786"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/4774"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=4771"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=4771"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=4771"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}