Currently, there are twenty-four Insurance companies in India, but how do you know which company offers you the best service as per your convenience? So, IRDA introduced the solution to...
Insurance Broker & Its Categories
An insurance broker is a professional and qualified individual, firm, or company with expertise and vast knowledge of insurance-related products, services, laws, and regulations concerning the same. An insurance broker can be a person, or it can be a firm or company that acts through its director, promoter, employee, or any officer in charge.
An insurance broker acts as a middleman between an insurance company and a client looking for an insurance policy by providing professional advice and guidance to the people looking for the same. No broker can act as an insurance broker unless they obtain a valid Broker License In India from a regulatory authority.
Insurance Regulatory and Development Authority of India (IRDAI) regulates, supervises, and governs insurance broker and its registration, license, and functioning through IRDA (Insurance Broker) regulation 2008. Following Insurance brokers are authorized by IRDAI to obtain Insurance Broker License in India:
- Direct Insurance Broker: These are the insurance brokers who offer or arrange the services of the insurer for the clients who need insurance or reinsurance within India. They also provide services such as claim consultancy, risk management services, etc. in exchange for a commission or fee.
- Composite Broker: They are the insurance agent who holds the valid license to offer life and general insurance and services related to the same. They arrange the insurance services for its client of insurer located in India or Abroad. Licensing of these brokers is very selective by an authority.
- Reinsurance Broker: These agents arrange and provide re-insurance services to its clients of the insurers located in India or Abroad.
Browse through our articles on services provided at Swarit Advisors, and just let us know if we can help you with your NBFC registration or NBFC for Sale or RBI Advisory Services.
Applicants for Insurance Broker License in India
Following entities can apply for a grant of Certificate of registration to act as an insurance broker:
- Private company registered under the Companies Act 2013 (earlier 1956)
- Registered Cooperative Societies
- Registered Limited Liability Partnership (LLP)
- Such other entity as recognized by IRDAI to act as an insurance broker.
Duties and Functions of Insurance Broker
Following are the activities and functions to be performed by insurance brokers who hold valid broker license:
- To obtain the full information about the client and their needs and types of insurance service.
- Understanding the business of clients and preparing risk management of clients, which has to be explained and communicated to Insurer Company on behalf of such client.
- To provide consultancy and advice on appropriate insurance products, its coverage, and terms.
- Keeping an insight about the available insurance market.
- To receive a quotation from an insurer and submit it for the consideration of a client.
- To assist the insurer by providing underwriting information in evaluating any risk that pertains to policy.
- To communicate with the client and act accordingly as per the instructions that clients provide.
- To provide written acknowledgment and continuous progress report to the clients.
- Assist clients in paying premiums and making negotiations in terms of policies.
- Maintaining the proper records of policies, services, and claims of clients and records of the insurer’s company
- Providing guidance and assistance in providing e-insurance policies, i.e., online policies.
- Getting familiarized with clients’ risk management policies and gathering information about the client’s business.
- To ensure risk management in case of re-insurance.
- Making terms and conditions negotiable on behalf of clients.
Following are the documents to be attached mandatorily with the application for a license:
- Copy of MOA & AOA in case of companies authorizing such business.
- Details about the principal officer whether they satisfy fit & proper criteria of IRDAI.
- Supporting documents proving that an applicant has undergone the required training.
- Declaration by the principal officer that states that, along with directors, promoters, employees, or KMP of the company, is not disqualified from acting as an insurer.
- Names of at least two qualified brokers along with their qualifications responsible for procuring insurance business after getting a license.
- Complete details of bank account along with details of principal bankers and statutory auditors of the company.
- Requisite infrastructure details of insurance brokers such as office space, IT infrastructure, equipment installed, and qualified human resources.
- Projected and estimated reports of three succeeding years.
- Complete list of principal officers and persons in charge, including their professional background, Curriculum Vitae, experience certificate in the field of insurance, etc.
Broker License Procedure
Following is the detail steps to be adhered to while applying for Insurance Broker License in India:
- Apply in form B of schedule I of (Insurance Broker) regulation 2008 to the authority along with non-refundable fee and mandatory documents as an attachment (described above).
- Authority, after scrutinizing an application can further demand any information or document that has to be submitted by an applicant within 30 days of demand.
- After consideration of the application, authority is satisfied with the correctness of the application, shall issue an in-principle approval for an insurance broker license.
- After the receipt of in-principal approval, the applicant has to comply with additional requirements and submit the insurance broker license fee online.
- In case the authority is satisfied with the fulfillment of conditions and requirements as mentioned in the in-principle approval, shall allot the certificate of license in form J of schedule I of (Insurance Broker) regulation 2008.
- Such license remains valid for three years from the date of allotment, which can be renewed by applying at least one month before the expiry of such license.
Government Fees for Broker License in India
Fees for the license of the insurance broker, as mentioned under form D of schedule I of (Insurance Broker) regulation 2008, shall be paid by an applicant while applying for a license. Application Fee and non-refundable is categorized depending upon the type of broker, such as:
- Non-Refundable Fee:
- For direct broker: INR 25000
- For reinsurance broker: INR 50000
- For composite broker: INR 75000
- Registration Fee:
- For direct broker: INR 50000
- For reinsurance broker: INR 150000
- For composite broker: INR 250000
- Renewal Fee:
- For direct broker: INR 100000
- For reinsurance broker: INR 300000
- For composite broker: INR 500000
As the Indian Markets are growing steadily, there has been a stark increase in the financial sector as well, which has led to insurance brokering becoming a popular choice for business amongst new startups and freshers. The process of getting an insurance broker license can be cumbersome. For getting the insurance broker license easily with professional expertise, contact us.