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The insurance sector in India is rapidly developing and moving towards a more transparent and accessible market for insurance buyers. Insurance businesses that operate in India include insurance companies, web aggregators and insurance brokers. In order to start an insurance broking company, it is essential to obtain the Insurance Broker License. This guide lays down in detail, the requirements for insurance broker license, specifically the insurance broker education requirements.
Insurance Brokers in India
In India, the concept of insurance brokers is not new. There have existed thousands of insurance broker companies for years, but the sector was primarily unorganised. Recently, the InsuranceRegulatory and Development Authority of India (Insurance Brokers) Regulations, 2018 were enacted to supervise and monitor insurance brokers as an insurance intermediary in India.
Under Regulation 2(k) of the IRDAI Insurance Broker Regulations  , an insurance broker has been defined as a person who is a direct broker, a reinsurance broker or a composite broker registered with the IRDAI.
Regulation 2(e) further defines Composite Brokers as Insurance Brokers who are registered with the IRDAI who solicit and arrange insurance, reinsurance or both, for their clients with insurance companies or reinsurance companies in India or abroad for a remuneration along with a fee. They also provide consultancy services for claims, risk management or other advisory services to insurance buyers as per the IRDAI regulations.
Also, as per Regulation 2(f), Direct Brokersare Insurance Brokers who provide services for solicitation and arrangement of insurance business for their clients with insurance companies in India or abroad in exchange forremuneration along withsome fees. They may also provide consultancy services for claims, risk management or other advisory services to insurance buyers as per the IRDAI regulations.
Lastly, Regulation 2(p) defines Reinsurance Brokers as Insurance who solicit and arrange reinsurance for their clients with reinsurance companies in India or abroad for a remuneration along with a fee. They also provide consultancy services for claims, risk management or other advisory services to insurance buyers as per the IRDAI regulations.
Minimum Educational Requirements for Insurance Broker License
In order to operate as any of the types of insurance brokers in India and obtain thelicense, there are certain requirements for Insurance Broker License to be fulfilled. The first requirement that must be fulfilled by the insurance brokers relates to their educational qualifications. As per the IRDAI Insurance Broker Regulations, an insurance broker must possess any of the following educational qualifications:
- Bachelor’s degree in the fields of Arts, Science, Social Sciences, Commerce, Engineering, Law or any other equivalent form of degrees from any institution oruniversity recognised by a State or the Central Government; or
- Master’sdegree in Business Administration or an equivalent from a recognised institution or university; or
- Associateship or Fellowshipfrom the Insurance Institute of India, Mumbai; or
- Associateship or Fellowshipfrom the Institute of Risk Management, Mumbai; or
- Post-graduate qualification from the Institute of Insurance and Risk Management, Hyderabad; or
- Associateship or Fellowshipfrom the Institute of Chartered Accountants of India, New Delhi; or
- Associateship or Fellowshipfrom the Institute of Cost and Works Accountants of India, Kolkata; or
- Associateship or Fellowshipfrom the Institute of Company Secretaries of India, New Delhi; or
- Associateship or Fellowshipfor the Institute of Actuaries of India; or
- Associateship or Fellowshipfor Chartered Insurance Institute, London; or
- Chartered Financial Analyst from Institute of Chartered Financial Analyst of India; or
- Certified Associateship of the Indian Institute of Bankers, Mumbai; or
- Any other qualification specified by the IRDAI.
Professional Training and Examination Requirements for Insurance Broker License
Additionally, the insurance broker must also fulfil the following training requirements for insurance broker license registration:
- Completion of the prescribed fifty hours of theoretical and practical training by the Principal Officer and Broker Qualified Persons from an institution recognised by the IRDAI, and passing the insurance examination after the end of the training as conducted by the National Insurance Academy, Pune or any such examining body which has been recognised by the Authority.
- Theoretical and practical training from an institution recognised by the IRDAIfor a period of twenty-five hours when thePrincipal Officer and Broker Qualified Persons of the applicant are any of the following:
- Associate or Fellow of the Insurance Institute of India, Mumbai; or
- Associate or Fellow of the Institute of Risk Management, Mumbai; or
- Associate or Fellow of the Institute of Actuaries of India; or
- Post graduate of the Institute of Insurance and Risk Management, Hyderabad; or
- Associate or Fellow of the Chartered Insurance Institute, London;
- Associate or Fellow of the Institute of Chartered Accountants of India, Institute of Cost Accounts and Works of India, Institute of Company Secretaries of India, Chartered Financial Analyst of ICFAI or any other qualifications as recognised by the IRDAI;
- The above-mentioned candidates also need to pass the insurance examination within one year from the end of the period of training which is conducted by the National Insurance Academy, Pune or any other examining body as recognised by the IRDAI.
Certificate for Principal Officer and Broker Qualified Person
The Principal Officer and Broker Qualified Person of the applicant also need to fulfil the following requirements:
- The Principal Officer and Broker Qualified Person must obtain a valid certificate issued by National Insurance Academy, Pune or any other body recognised by Authority to file an application for Insurance Broker License.
- Such certificate is valid for a period of three years from the date of issue.
- The certificate issued to the Principal Officer and Broker Qualified Person mentions the name of the insurance broker who has sponsored the individual, their Aadhaar Card number or any other field as required by the IRDAI.
- When the Principal Officer and Broker Qualified Person of an insurance broker wish to work for any other insurance broker,they can do so by filing an application with thebody recognised by the IRDAI through the proposed insurance broker along with a No-Objection Certificate issued by the present insurance broker.
- If the present insurance broker does not issue a NOC to the Principal Officer and Broker Qualified Person within 30 days, it is deemed as no objection from the insurance broker to the switch over.
- After receiving the request from the insurance broker, a revised certificate is issued by the NIA, Pune or any other IRDAI-recognised body to change the name of the insurance broker.
- The data of Principal Officers and Broker Qualified Persons of insurance brokers in India must be shared by the NIA, Pine or any such body with the IRDAI in the prescribed manner.
- If the Principal Officer or Broker Qualified Person are qualified and are already working with an insurance broker who holds the Insurance Broker License under Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013, they may continue to work with insurance brokers registered under these regulations.
- In such case, the information of such Principal Officers and Broker Qualified Persons must be provided to NIA, Pune or any other body recognised by the IRDAI when the application to grant the Insurance Broker License registration is filed or within six months from the date of such registration.
- After receiving this information, NIA Pune or any other body recognised by the Authority issues a certificate to the Principal Officers or Broker Qualified Persons.
Read, Also:How to Get Insurance Broker License in India
Other Conditions Relating to Insurance Broker License
The Insurance Broker License registration or renewal under theInsurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2018 is granted only when the following additional conditions are fulfilled:
- The Insurance Broker must exclusively undertake the business of an insurance broker permitted under the IRDAI regulations.
- The Insurance Broker must comply with the provisions of the Insurance Act, the Insurance Regulatory and Development Authority Act, 1999 and the Regulations in addition to the circulars, guidelines and any other notifications issued by the IRDAI;
- The Insurance Broker must also inform the IRDAI about any information or particulars submitted to the Authority previously, in writing. This must be done when such information is found to be false or misleading regarding any material by the IRDAI or when there is any material change in the information already submitted;
- The Insurance Broker must also take adequate measures for redressal of any grievances of its clients within 14 days of receiving such complaints and keep the IRDAI informed about the number, nature and other details of the complaints received from such clients in format and manner as may be specified by the Authority;
- The Insurance Broker must also solicit and procure a reasonable number of insurance policies in accordance with their resources and as the number of Broker Qualified Persons associatedwith the broker.
- The Insurance Broker also needs to maintain records in the format specified by the IRDAIthat lay downthe details ofeach policy solicited by the Insurance Broker as per the broker qualified person or other authorised persons.
- The Insurance Broker cannot undertake any multi-level marketing for solicitation and procurement of insurance products;
- The Insurance Broker must also ensure compliance of the Code of Conduct applicable to it;
- The Insurance Broker must maintain its books of accounts as specified in the IRDAI regulations.
Fit and Proper Criteria Requirements
The insurance broker needs to give full details of the following if the answers to any of the answers are yes:
- If the insurance broker has ever registered or obtained a license from any of the regulatory authorities under any law such as the Securities and Exchange Board of India, Reserve Bank of India, IRDAI, PFRDA, FMC etc.
- If the insurance brokerhas carried on business under any name other than the name stated in the Insurance Broker License application.
- If any regulatory authority has refused or prevented the insurance broker from carryingout any business, trade or profession for which a particular license, registration or permission is needed by law.
- If the insurance brokerhasever been censured, disciplined, suspended or refused any authorisation, license or registration by any authority to perform any business activity;
- If the insurance broker has been subject to any investigations or disciplinary proceeding or hasreceived any warning or reprimand by any regulatory authority;
- If the insurance broker has been convicted of any offence or subject to any pending proceedings under any law;
- If the insurance broker has been banned from entry at any profession or occupation at any time;
- If the insurance broker has any pending or commenced or resulting in conviction in the past for violation of economic laws and regulations;
- If the insurance broker has any pending or commenced or resulting in conviction in the past against them, then the details of the criminal prosecution must be provided;
- If the insurance broker attracts any of the disqualifications envisaged under Section 164 of the Companies Act 2013;
- If the insurance broker has been subject to any investigation at the instance of Government department or agency;
- If the insurance broker has ever been found guilty of a violation of rules, regulations or legislative requirements by the customs, excise, income tax, foreign exchange or any other revenue authorities;
- If the insurance broker has, at any time, come to the adverse notice of a regulator such as SEBI, IRDAI, DCA. However, details about any orders and findings made by regulators which have been later on reversed or set aside completely, it is not necessary to make a mention of the same.Conversely, if the case is reversed or setaside on technical reasons like the limitation or lack of jurisdiction, etc. and not on merit or the order of the regulator is temporarily stayed, and the appellate or court proceedings are pending, the same must be mentioned.
- If any of the insurance broker’s group company, associate company or a related party has any license or registration which is issued by the IRDAI.
The process of Insurance Broker License registration is complex, and in addition to all these requirements, there is a detailed code of conduct provided in the Regulations which must be followed by the Direct, Composite or Reinsurance Brokers.
To ensure that all the requirements for Insurance Broker License are met, and the applicant comprises of all the relevant documents and information, it is advised to consult IRDAI experts regarding the process and execution of registration. Swarit Advisors are a team of experienced professionals who can help you with your IRDAI registrations such as Web Aggregator License, Insurance Broker License, renewal, replies, business plan drafting, and much more.