An Overview of Insurance Company Registration
The Indian insurance sector has experienced decent growth in recent years and is predicted to continue growing significantly. Before beginning the business of insurance in India, every insurer who wants to conduct insurance business must obtain a certificate of Insurance Company Registration from the IRDAI (Insurance Regulatory and Development Authority). The Insurance Act of 1938 and specific regulations set forth by the Authority outline the prerequisites for applying for insurance company registration.
The ability to offer and look for insurance products or items is granted by a licence from an insurance company. The State Insurance Commissioner is in charge of issuing licences to insurance companies so they can sell and buy insurance. This responsibility is divided among various insurance categories, such as life, health, vehicle, and workers' compensation. A licence for each specific state is necessary for someone who resides in one state but sells insurance in nearby states. The Insurance Company Licence can be obtained without subsidising with a registered office, but doing so is necessary once you want to collaborate.
Before 1999, the Insurance Act of 1938's Insurance Controller monitored the country's insurance industry. However, the establishment of the IRDA has significantly altered this industry. People began to feel that the Insurance Company Licence needed to be renewed as a result of IRDAI improvement. Before submitting an application for any licence for an insurance company, it is required of all origins to obtain a certificate of Insurance Company Registration from the Authority. The IRDAI is the source for the licence required for a number of insurance classes.
Basic Conditions for Registration of an Insurance Company
The Government of India has made it very simple and clear that no company or individual shall deal in the products or services of insurance without first obtaining registration with the IRDAI (Insurance Regulatory and Development Authority). This is due to the implementation of the IRDAI Registration of Insurance Marketing Firm Act, 2015. Those who offered products before the Insurance Marketing Firm Act's registration must adhere to the rules and register as a new business within three months of the Act's commencement date.
What is the Eligibility Criteria for Insurance Company Registration?
The following are the requirements for registering an insurance company in India:
- Any business that fits into one of the following categories is eligible to apply for registration as an insurance company:
- A Cooperative Society;
- Limited Liability Partnerships (LLPs);
- The IRDAI identifies a company as:The insurance provider may also submit an application prior to the effective date of the Act, but it should be noted that the foreign firm may only hold a maximum of 26% of the paid-up capital.
- The registered name of an LLP at the time of formation must include the words "Insurance Marketing Firm";
- Possess adequate tools, infrastructure, and people resources.
- Once these requirements are met, the IRDAI can begin the process of registering an insurance company. According to the Insurance Act of 1938, the Government has retained the registration process divided into the three subcategories of R1, R2, and R3.
Essential Documents Required for Insurance Company Registration
An application for license issuance must be submitted in the Form IRDAI/RI in by the applicant who wishes to receive an insurance company licence. The complete list of important documents needed for registration is shown below:
- The Memorandum of Association and the Article of Association must be submitted in full;
- A company's certificate of incorporation issued in accordance with the 2013 Companies Act;
- Provide all director information, including name, full address, and occupation, as well as the BODs' (board of directors) business plan for the following five years.
- provide a copy of the applicant's shareholding agreement between foreign investors and Indian promoters;
- Submit a certified copy of the annual report for the last five years from Indian promoters and foreign investors.
Application for Registration of an Insurance Company
The additional information will be in the application:
- Health, life, or general insurance application: evidence that a value capital settlement has been made in excess of Rs. 100 crore;
- Request for reinsurance: evidence that the settled up value capital is greater than or equal to Rs. 200 crores;
- An affidavit from the foreign and Indian Promoters attesting to the sufficiency of the paid-up equity capital after deducting introductory costs;
- Shareholding breakdown, including the specific amount of shares allocated to promoters;
- FIPB approval if FDI exceeds 26% limitation;
- A copy of the catalogue as published;
- PCS or PCA Certificate attesting to the consistency of registration fees share capital value, and other Act requirements;
- Confirmation of non-refundable expenses totalling Rs. 5 lakhs;
- WTD, MD, and CEO stated that the holding of remote paid-up capital is being treated as referred under Indian Insurance Companies (Foreign Investment) Rules, 2015 read with numerous principles recognised with it;
- A copy of the MOU or any additional agreements signed by the promoters, such as a shareholder or management agreement or a voting agreement.
- The level of bookkeeping, actuarial, and other professional authority in the administration, as well as the association structure, will be considered by the Authority while reviewing the application. Following an examination and if satisfied, the Authority will hand the applicant the registration certificate in Form IRDAI/R3.
Within 30 days of the date of rejection, together with the reason for rejection, the applicant will receive the authority. A candidate may contact SAT within 30 days of receiving the dismissal order. Within a year of receiving a certificate of insurance company registration, the applicant who was granted a licence to operate an insurance company must open for business.
What is Procedure for Insurance Company Registration?
Any person wishing to engage in insurance-related activities in India must first apply for and receive a registration certificate from the IRDAI.
- To receive a registration certificate for an insurance marketing firm, the applicant must first submit an application for registration to the IRDAI, which requires a business or individual to complete Form IRDAI/R1. The materials mentioned above support this Form.
- After you have completed the application and sent it to the Authority, they will review it and, if necessary, contact you to ask you to clarify any information you have supplied. The applicant may submit a request for special life insurance, general insurance, auto insurance, or health insurance products. On the applicant's will, that is.
- The Authority has the discretion to accept or reject the application for the Insurance Company Registration after it has been reviewed by the Authority. The Authority may approve the submission of the additional application if the applicant satisfies all the requirements and archives the fundamental requirements. This can be done by submitting Form IRDAI/R2, which then serves as the applicant's request application to the IRDAI for a Registration Certificate. The information included in this application includes:
- The Authority estimated the Form and upon completion satisfactorily provided certification in IRDAI/R3 once the aforementioned requirements were satisfied and IRDAI/R2 was properly filled out.
- The applicant must launch the business within 12 months of receiving the certificate of Insurance Company Registration from the IRDAI. Extensions are occasionally granted by the authorities; however, they can only be used for a period of up to 24 months. The received registration will then expire.
- The specified Authority may reject the registration application if it is not entirely satisfied with the supporting materials or the information provided by the applicant. If the application is turned down, the applicant will be notified within a month or 30 days of the rejection date. Within 30 days of the date the orders were received, the petitioner may appeal to the authorities for the same.
Suspension of Insurance Company License
- Fails to intimate the arrangements of the actions associated with the approximate estimation of obligations and benefits;
- Any case remains unpaid for more than three months following the court's ruling;
- Refuses to pay the yearly fees established by the Act;
- The insurer is insolvent or has been declared bankrupt;
- Without the Authority's approval, a class of matters or the guarantor's company has been transferred to a specific person, transferred to, or mixed with the matters of another safety net provider;
- Failure to comply with an order issued by the Authority, a direction, rules and regulations, or a requirement of the Act;
- In addition to the recommended business or insurance business, the insurer transfers other business.
What are the circumstances under which an applicant is not permitted to submit a request under IRDAI/R1?
- If the Authority has denied your request for registration;
- For any reason the foreign or Indian investors have chosen to abandon the project;
- From the date of the request for the application of insurance company registration during the previous two financial years;
- If the regulating authority has revoked your registration certificate;
- If the applicant has withdrawn their registration under any circumstances in the two financial years prior to the date of the application order; or if the applicant's name does not contain the words "assurance" or "insurance."
How Swarit Advisors will help you?
Swarit Advisors can provide you with valuable assistance to an insurance company during business registration. You can get our assistance in the following areas:
Legal Expertise: Offer legal consultation to help the insurance company navigate the intricate registration requirements, ensuring that all required legal documents are properly created and delivered.
Regulatory Compliance: Aid the insurance provider in understanding and observing the rules and specifications established by the relevant regulatory bodies for the licensing of insurance providers.
Document Preparation: To ensure a seamless registration procedure, assist in collecting and organising all necessary documents, including articles of incorporation, financial statements, and licenses.
Coordination and Follow-up: We will monitor how the registration process is going, take action on any outstanding issues, and make sure the insurance company’s application is handled effectively.
Post-Registration Support: We provide continuing assistance following the registration to assist the business with post-registration obligations and needs.
By providing these services, Swarit Advisors can play a crucial part in assisting an insurance company with navigating the complexities of business registration and ensuring that it enters the insurance market smoothly and in compliance.
Frequently Asked Questions
Any business that offers insurance-related goods, services, or other financial products and complies with IRDAI regulations is considered an insurance company under the Indian Insurance Act of 1934.
Insurance businesses in India are governed by the IRDAI (Insurance Regulatory and Development Authority of India), which was established in 1999.
A new company cannot be formed unless it has a minimum paid-up capital of Rs. 100 crores if it wishes to operate as an insurance business, and a minimum capital of Rs. 200 crores if it wishes to operate as a reinsurance company.
The applicant must appeal to SAT for reconsideration within 30 days of obtaining the IRDAI's detailed review of their application.
The 12-month window from the day an order is received before starting the business. However, if the applicant fails to launch their business within the allotted time, they may request a 24-month extension.
The yearly fee is not paid by the insurance or the insurer violates the General Insurance Business Act of 1972, the Companies Act of 2013, the Foreign Exchange Management Act of 1999, the Prevention of Money Laundering Act of 2002, or any other law that has been mandated by the IRDAI.
It is a business that offers insurance companies financial assurance. Reinsures take care of risks that are too great for agencies to handle on their own and allow backup tactics to win more business.
One must first obtain an insurance firm licence from the state's insurance commissioner in order to do insurance business.
You would want 100 crores of funds to launch an insurance company and 200 crores to establish a reinsurance company.
Because IRDA forbids insurers from quoting rates at will, it restricts the important risks to the Tariff Advisory Committee. The minimal percentage cap that insurers must maintain for both life and non-life business is established. so aids in the growth of both the rural and urban sectors.
The IRDAI insurance license is valid for one year. If the applicant wants to renew their insurance licence in India, they must submit a new application.