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Life is uncertain, and nobody knows what adversity might knock your door at the next step. Therefore, it is wise to safeguard and protect our belongings through insurance. Follow the principle of “Protection is better than Cure” and reach out to a certified insurance broker to preserve your business. An insurance broker is an individual or company with a vast knowledge of insurance products and services. He acts as an intermediary between a customer seeking insurance policy and a prominent insurance company. However, after the license expiration, an insurance broker needs to apply for renewal of insurance broker license.
Who issues the Insurance Broker License?
The supreme officials of the Insurance Regulatory and Development Authority (IRDA) administer the activities of an insurance broker. Thereby, only the regulatory body of IRDA has the power to issue and sanction the renewal of insurance broker license. As per the new version of IRDA Regulations, 2018, the insurance broker license shall be issued in three forms, namely:
- Direct Insurance Broker License : – A direct insurance broker assist clients about the insurance products and help them purchase a suitable policy. Thus, he earns a commission to sell a policy of the insurance company.
- Composite Insurance Broker License : – A composite insurance broker, has an official license to render a wide range of insurance services. IRDA is very selective while issuing such license.
- Reinsurance Broker License : – The reinsurance license applies to that broker who brings together the insurance companies with those clients who wishes to re-purchase their insurance policy. The reinsurance involves identifying the best policies and negotiating rates for the same.
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Eligibility Criteria for Insurance Broker Registration
Here is the list of applicants who can apply for insurance broker License in India:
- A private company registered under the Companies Act, 2013 or its previous version.
- Any LLP that got registered under the Limited Liability Partnership Act, 2008 can also apply for the issue and renewal of insurance broker license.
- An individual/person recognized by the Authority.
- A registered Co-operative Society formed in accordance with the provisions of Co-operative Societies Act, 1912 or other relevant law.
- A non-resident entity or a person who holds the residency of outside India.
- Foreign LLP registered under the laws of a foreign country.
Fee and Capital Structure for Insurance Broker License
The financial aspect plays a vital part in the whole procedure of renewal of insurance broker license. Let’s segregate the financial requirement one by one:
Minimum Capital Requirement:
- An applicant must have a minimum capital of INR 75 Lakh for the Direct Insurance Broker license;
- Similarly, the Reinsurance Broker needs to have INR 4 Crore;
- Lastly, the Composite Broker should have at least INR 5 Crore.
Net Worth Requirement
During the course of insurance broker registration, one has to maintain a minimum net worth of:
- 50 Lakh for Direct Broker License,
- And, 50% of the minimum capital for Reinsurance and Composite Broker.
Non Refundable Fee:
- Direct Broker: INR 25000
- Reinsurance Broker: INR 50000
- Composite Broker: INR 75000
Registration and Renewal Fee
- For Direct Broker license, the registration fee is INR 50000 while the renewal fee is INR 100000.
- The registration fee for the Reinsurance Broker license is INR 150000 whereas the broker is liable to pay INR 300000 for its renewal.
- And, for Composite Broker license, the registration and renewal fees are INR 250000 and INR 500000 respectively.
Documentation is yet another essential factor that an applicant must comply. If you want to apply for the insurance broker license, keep a checklist of these documents along with the Form C of Schedule I of the IRDA Regulations, 2018:
- A copy of your Memorandum of Association (MOA) and Articles of Association (AOA).
- Provide information about the Principal Officer, and ensure that he meets the fit and proper criteria in Form G of Schedule I.
- Also, submit a written declaration from the Principle Officer affirming that he along with the directors/ partners has never been disqualified as per the Section 42D of the Insurance Act, 1938;
- Comprehensive details about the directors, promoters, partners, and other key managerial personnel;
- List entailing the qualification background of at least two qualified brokers;
- Details of the existing bank account, principal bankers, and statutory auditors;
- A complete list of the current as well as proposed shareholders along with the balance sheet of the applicant company;
- In case, the shareholder(s) is a company or companies, provide the information of Board Resolution passed to invest and promote the applicant company;
- Additional details, if needed.
What is the Validity of Certificate of Insurance Broker?
Once the Insurance Regulatory and Development Authority enable the insurance broker license, it becomes valid for 3 years from the date of issue. If the authority suspends or revoke the permit within the prescribed period of three years, then it shall remain no longer valid. As it is considered to be an illicit act to carry an insurance broker business without a certificate of registration, so one has to apply for the renewal of insurance broker license.
Renewal of Insurance Broker License
Now that you have understood the importance of insurance broker registration to channelize the functions of a broker, it is further essential to perceive the renewal process. Follow these simple three steps if your insurance broker certificate is soon to get expired:
- File an application to the IRDA at least 30 days before the date of expiry of insurance broker license.
- You need to fill the renewal application in Form K of Schedule I
- Then affix all the relevant documents with your application.
- Lastly, pay the renewal fees as per the category of license you fall in, i.e., Direct Broker, Reinsurance Broker, and Composite Broker.