An Insurance Broker may be a person or company which is registered as an advisor on matters of insurance. It aids the clients in getting the insurance cover from an insurer. Usually, an insurance broker has professionally qualified people working for it or it acts through a firm, whose directors, partners or employees have expert knowledge on laws related to insurance and profound knowledge of insurance products. These professionals suggest people on their insurance needs.
Therefore, an insurance broker acts as an intermediary between the insurance company and clients looking forward to purchasing an insurance policy. By providing its professional services, the insurance broker helps the clients in taking decision in relation to the most appropriate insurance policy for them.
There are three types of Insurance Brokers:
Direct Insurance broker
The direct insurance broker deals with solicitation and procurement of insurances. It sells insurance policies to the clients through its website/computer software and takes commission from the insurance company whose insurance policy is bought by the client.
A reinsurance broker is one who connects the insurance company with clients who want to take the insurance policy again. Hence, the reinsurer broker acta as an intermediary between the primary issuer and the re-insurer.
Composite Insurance Broker
Composite Insurance Broker is an agent who provided the services of both- the direct broker as well as the reinsurance broker.
Insurance Regulatory and Development Authority of India (IRDAI) is the governing body for Insurance Brokers in India and licenses issued to them. As per the IRDA (Insurance Broker) Regulations, 2018, the minimum capital required for different types of insurance brokers have been laid down:
As for the requirements of Net Worth, the insurer broker is required to maintain minimum net worth of INR 50 lakhs if application is made for direct broker and in case of reinsurance and composite broker, the net worth has to be 50% of the minimum capital requirement.
In India, the following are eligible for making an application for the Insurance Broker License:
Note: It is pertinent to mention that if the applicant is an LLP, the following cannot be the partners in the same:
The procedure for getting insurance broker license is as follows:
The non-refundable fee for direct broker license is INR 25,000, for reinsurance broker license is INR 50,000 and for composite broker is INR 75,000.
The fresh registration fee for direct broker is INR 50,000, for reinsurance broker is INR 1,50,000 and for composite broker is INR 2,50,000.
The following is the list of documents that are to be submitted along with the application form, as mentioned in the Schedule I of IRDA (Insurance Broker) Regulations of 2018:
The Certificate of Registration, after issuance, will be valid for a period of three years from the date of issue. In case, the license is suspended or revoked by the authorities within this span of three years, it shall no longer remain valid. It is illegal to carry on the business of Insurance Broker without the Certificate of Registration.
It is necessary to hold a valid certificate of registration in order to carry out the functions of the Insurance Broker. If the certificate of registration is near expiry, an application should be made to the authority at least 30 days prior to the expiry of the license. The renewal application should be made in Form K of Schedule I and should be accompanied with the relevant documentsand renewal fees.
The renewal fees for Direct Broker is INR 50,000, for Reinsurance Broker is INR 1,50,000 and for Composite Broker is INR 2,50,000.
In case anyone wants to run an insurance broker business, it is mandatory that they get the license for the same as only the licensed insurance brokers can display products and price comparisons of the insurer companies. They facilitate product comparison for the potential customers and target them to one platform. However, getting license for insurance broker business is no cakewalk and requires proper compilation of relevant documents along with the duly filled application form. Professional expertise is required for checking the eligibility and the authenticity of all the documents that are attached with the application. Our team of professionals, who have years of experience in the field, can help you in getting the insurance web aggregator license with ease.
For more information on insurance broker, certificate of registration, renewal of the license or related information, contact us.
Yes, as per the Insurance Broker Regulations, 2018, the insurance broker can provide the clients with additional services in the fields of consultancy, risk management, risk mitigation, risk advisory, and charge the clients with fees for the same.
The existing insurance brokers can increase the share capital within 2 years from the date of new regulation. This means that the paid-up capital requirements have to be complied with till January 18, 2020.
Yes, the business from a single client cannot be more than 50% of the remuneration and the premium, the way it is in the Broker Regulations 2013.
No, while evaluating the limit of business from a single client, the business from reinsurance and emanating from Government or Public Sector Undertaking, will not be considered.
An individual who is a qualified broker and is capable of taking up the duties and responsibilities of an executive role, is eligible to become the Principle Officer of an Insurance Broking Company. Such officer may not be the Director but shall be elected as the Chief Executive Officer.
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