How to Start a Insurance Broker License

registrtion process
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Overview of Insurance Broker License

Nowadays, a wide variety of insurance products are available in the market, which may confuse a layperson in making the right insurance choice. An Insurance Broker suggests and guides people about the best for their needs and helps them to make the right financial decisions. An Insurance Broker acts as a middleman between the general public and insurance companies. They assist people in buying the most suitable insurance policies as per their financial needs. To start any insurance brokerage-related activities, a company needs to obtain the Insurance Broker License.

Regulatory Framework for Insurance Broker License

In India, the legal provisions regulating the Insurance Broker License are as follows:

  • The Insurance Regulatory Development Authority Act, 1999;
  • The Insurance Regulatory Development Authority of India (Insurance Brokers) Regulations, 2018.

Types of Insurance Brokers

In India, the different types of Insurance Broker can be summarised as:

  • Direct Insurance Broker

    Direct Insurance Brokers provide details about the various insurance products and insurance businesses available in the market. They assist clients in choosing the appropriate policy as per their needs. Also, activities like opening an e-insurance account for a client or assisting them in paying the premium to their insurers are included in the working of a direct insurance broker.

  • Reinsurance Broker

    A Reinsurance Broker performs similar operations to the Direct Insurance Broker. The activities related to a reinsurance insurance broker are as follows:

  1. Maintaining market statistics of the reinsurance market;
  2. Selling of Products related to reinsurance;
  3. Negotiating on behalf of the client.
  • Composite Insurance Broker

    A Composite Insurance Broker provides services on insurance-related matters to insurance buyers. The insurance services provided by a Composite Insurance Broker are related to general and life insurance. However, the licensing of a Composite Insurance Broker by the IRDAI is very selective.

Eligibility for Insurance Broker License

The entities eligible to apply for the Insurance Broker License in India are as follows:

  • Any company registered under the provisions of Companies Act, 2013;
  • Any registered co-operative society incorporated as per the norms of Co-operative Societies Act, 1912;
  • Any Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008;
  • Any other person recognised by the Authority.

In case the applicant for Insurance Broker License is a registered Limited Liability Partnership, then the following are not eligible to become a partner:

  • Non-Resident Entity;
  • Any foreign Limited Liability Partnership registered as per the law of that foreign country;
  • Any person who resides outside India.

Minimum Requirements for Insurance Broker License

In India, the minimum requirements for obtaining an Insurance Broker License can be summarised as:

  • Financial Requirements

    The Financial Requirements for obtaining Insurance Broker License are as follows:

  1. For Direct Insurance Broker

    Rs 75 Lakh.

  2. For Reinsurance Broker

    Rs 4 Crore.

  3. For Composite Broker

    Rs 5 Crore.

  • Net-worth Requirements

    The Net-worth Requirements for obtaining Insurance Broker License are as follows:

  1. For Direct Insurance Broker

    Rs 50 Lakh.

  2. For Reinsurance Broker

    50% of the Minimum Capital Requirement.

  3. For Composite Broker

    50% of the Minimum Capital Requirement.

  • Deposit Requirements

    For obtaining an insurance broker license, the applicant company needs to deposit a certain amount with the scheduled bank. The amount required to be deposited in a scheduled bank is:

  1. For Direct Insurance Broker

    Rs 10 Lakh.

  2. For Reinsurance Broker

    10% of the Minimum Capital Requirement.

  3. For Composite Broker

    10% of the Minimum Capital Requirement.

Functions of Insurance Broker

In India, the functions of an Insurance Broker are:

  • Direct Insurance Broker

    The functions of a Direct Insurance Broker are as follows:

  1. Gather information on the insurance business and risk retention strategy of the client;
  2. Render advice regarding the suitable insurance cover and terms;
  3. Gain complete knowledge about the different insurance product and insurance market available;
  4. Provide a quotation as per the consideration of the client.
  • Reinsurance Broker

    The functions of a Reinsurance Broker are as follows:

  1. Understand the client’s business nature and risk management strategy;
  2. Maintain clear and proper records of the insurer’s business;
  3. Render advice on the matters relating to insurance covers and various types of insurance covers available in the reinsurance markets;
  4. Establish a database of the available reinsurance markets which also includes the solvency rating of each reinsurer;
  5. Protect the reinsurance market,
  6. Deliver risk management services;
  7. Propose a reinsurer or a group of reinsurers;
  8. Negotiate with a reinsurer on behalf of the client.
  • Composite Broker

    A Composite Broker performs all the function of a direct insurance broker and reinsurance broker.

Checklist for Insurance Broker License

The conditions to be fulfilled by an applicant company before obtaining an Insurance Broker License are as follows:

  • The applicant company must end its name with the word Broking;
  • The MOA (Memorandum of Association) of the applicant company must contain the activities of insurance broking as its principal objective;
  • The applicant company must satisfy the minimum financial, capital and deposit requirement as specified in the regulations;
  • The insurance broker company should not hold any foreign investment which exceeds the limit of 26% of the total paid-up capital;
  • The company needs to deposit 20% of the initial capital with the registered bank;
  • The principal officer must hold a fair qualification, and have cleared the brokers’ exam, and possess the required training;
  • The applicant company must hire a minimum of two persons with the compulsory qualification and training;
  • The company must have the required infrastructure along with well-trained employees to run the business of insurance broking.

Documents Needed for Insurance Broker License

The documents needed to be submitted together with Form C of Schedule I of the Insurance Regulatory Development Authority of India (Insurance Brokers) Rule, 2018, are as follows:

  • The applicant company needs Form B to fill the application for the Insurance Broker License;
  • Copy of Memorandum of Association and Article of Association of the company;
  • Information concerning the Principal Officer in Form G of Schedule I. Further, the Principal Officer must complete the training and pass the insurance examination before submitting the application;
  • A declaration expressing that the PO and the directors/partners and other key administrative workforce are not excluded under Section 42 D of the Insurance Act;
  • Complete details of the partners, directors, advertisers and other KMP (Key Managerial Personnel).
  • A list of at least two qualified agents along with their qualifications.
  • Complete details of the company’s bank account;
  • Details of the Principal Bankers along with the statutory advisors;
  • List of all the shareholders;
  • A copy of the board resolution passed in the company’s board meeting for investing and promoting the company;
  • Audited Balance Sheet of the Company;
  • Any other detail as may be required.

Procedure for obtaining Insurance Broker License

In India, the steps included in the procedure for obtaining an Insurance Broker License can be summarised as:

  • Submission of Application

    The applicant company needs to file Form B of Schedule I as an application form for the Insurance Broker License along with the non-refundable application fee. It also needs to submit the necessary documents with the application form to the Insurance Regulatory Development Authority of India (IRDAI).

  • Examination of Documents

    The authority examines the documents submitted. At this stage, the authority can raise queries and can ask for more details if it needs further clarity from the applicant. Further, the authority has the power to ask for additional documents.

  • Submission of Additional Documents

    The applicant needs to submit the additional documents within thirty days from the date of receiving the intimation from the authority.

  • Issue of In-Principal Approval

    After examining and verifying all the documents submitted, if the authority is of the opinion that the applicant satisfies all the necessary conditions, it will issue the in-principle approval for the Insurance Broker License.

  • Additional Submission

    After acquiring the in-principle approval, the applicant company needs to comply with all the additional requirements and pay the prescribed license fees to the authority.

  • Issue of Certificate of Registration

    Once the Insurance Regulatory and Development Authority of India (IRDAI) is satisfied that the applicant company has complied with all the requirements as prescribed in the IRDA (Insurance Broker) Regulations, 2018, and the in-principle approval, it grants a COR (Certificate of Registration) to the applicant company. Further, the COR is issued in Form J as prescribed in Schedule I of the IRDA Regulations.

Fee for Insurance Broker License

The applicant company needs to submit the fee for Insurance Broker License in Form D of schedule I. The prescribed fee for the application, registration and renewal can be summarised as:

  • Non-Refundable Application Fees:
  1. For Direct Broker

    Rs 25000.

  2. For Reinsurance Broker

    Rs 50000.

  3. For Composite Broker

    Rs 75000.

  • Registration Fee for Fresh Application:
  1. For Direct Broker

    Rs 50000.

  2. For Reinsurance Broker

    Rs 150000.

  3. For Composite Broker

    Rs 250000.

  • Renewal Fee for a period of 3 years:
  1. For Direct Broker

    For 1 Lakh

  2. For Reinsurance Broker

    For 3 Lakh

  3. For Composite Broker

    For 5 Lakh.

Validity and Renewal of Insurance Broker License

The certificate of registration for an Insurance broker business is valid for three years, starting from the date of issuance. Further, the applicant company can file an application for the renewal of the insurance broker license at least one month before the expiry of the validity period.

Frequently Asked Questions

There are three different types of Insurance Broker License prevailing in India, such as Direct Insurance Broker; Composite Insurance Broker; and Reinsurance Broker.

The minimum capital requirement for obtaining Insurance Broker License in India is Rs 75 Lakhs for Direct Insurance Broker; Rs 5 Crores for Composite Insurance Broker; and Rs 4 Crores for Reinsurance Broker.

Insurance Broker License in India is regulated by the IRDAI. Insurance Brokers are regulated by the IRDA (Insurance Broker) Regulations, 2018 issued by the IRDAI.

In India, the entities eligible to obtain Insurance Broker License include any company registered under the provisions of Companies Act, 2013; any registered co-operative society formulated under the Co-operative Societies Act, 1912; any Limited Liability Partnership registered under the LLP Act, 2008; any other business entity acknowledged by the Authority.

The certificate of Insurance broker license is valid for a period of three years, starting from the date of issuance. Further, an application for the renewal of the registration of insurance broker license can be filed least one month before the date of expiry of the registration.

The functions of a reinsurance broker include familiarising with the client’s business nature and risk retention strategy; maintaining clear, transparent and healthy records of the insurer’s business; advising clients on the matters relating to insurance covers and different types of insurance covers available in the transnational insurance and reinsurance markets.

The activities of the insurance web aggregator displaying the information and facilitating comparison between different insurance policies available in India, and help insurance buyers to choose the right policy as per their requirements. On the other hand, the activities of an Insurance Broker include guiding insurance buyers to buy the best insurance product available depending upon their financial and coverage requirements.

Swarit Advisors provide Insurance Broker License services PAN-India. We have successfully completed Insurance Broker License services for hundreds of businesses in Delhi, Mumbai, Gurgaon, Bangalore, Noida, Chennai, Ahmedabad, Hyderabad, Kolkata, Pune, Surat, Lucknow, Jaipur, Kanpur, Nagpur and various other Indian cities.

Yes, Swarit Advisors is a 100% online platform rendering services all over the nation no matters wherever the individual is conducting his or her business. The only thing required is an internet connection on the mobile or laptop, and we are all set to assist you.

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