How can you become an Insurance Broker in India?

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How can you become an Insurance Broker in India?

An Insurance Broker is an insurance entity licensed by the IRDA to provide insurance broking services in India. Needless to say, to become an insurance broker, you must meet the eligibility criteria, put together certain documents and apply for the IRDA license. Therefore, in this article, we will tell you the precise process that you can become to start an insurance broking company in India.

If the recent pandemic has one something right, it’s making people aware of the uncertainty of life. To tackle that unknown, people have started to rush towards buying insurance policies – all to safeguard the lives of their loved ones.

But there is an issue; they can’t contact the insurance companies directly.

Insurance policies consist of several terminologies that will go over the head of most customers. Therefore, a new form of trade has arisen from this crisis – insurance brokers.

An insurance broker is an insurance intermediary that acts as a bridge that, in simple terms, circumvents the communication gap between an insurance company and an insurer.

This article will explain the steps you must follow to become an insurance broker in India.Step 1: Choose the type of insurance broker

To become an insurance broker, you must have efficient capital. One of the factors that decide that is the type of insurance broker you want to become:

1. A direct insurance broker to intermediate between an insurance company and an insurance customer;
2. Reinsurance broker who intermediates between an insurance company and a reinsurance company;
3. Or a composite insurance broker that provides the services of both insurance and a reinsurance broker.

Step 2: Incorporate a company

To obtain the IRDA license to act as an insurance intermediary, you need to be a company. Even though you can select either a cooperative society or an LLP, a company is a better option because of the following reasons:

1. It makes it easier to manage the business,
2. The process of company incorporation is a simple one,
3. It provides you with an accurate infrastructure to run your insurance broking business.

When establishing your company, take care of the following requirements:

For Direct brokers

1. Paid Up capital requirement: INR 75 Lakhs
2. Net worth requirement: INR 50 lakh
3. Deposit Requirement: INR 10 Lakh

For Reinsurance Brokers

1. Paid Up capital requirement: INR 4 Crores
2. Net worth requirement: 50% of paid-up capital
3. Deposit Requirement: 10% of paid-up capital

For Composite Brokers

1. Paid Up capital requirement: INR 4 Crores
2. Net worth requirement: 50% of paid-up capital
3. Deposit Requirement: 10% of paid-up capital

Step 3: Train the Principal Officer

Go through the IRDA training for an insurance broker if you are the principal officer of your company. The same goes for anyone under your employment that you hire to facilitate insurance services.

It is a 50-hour training regimen where you will learn about the regulations of insurance brokers.

Step 4: Furnish the documents

To fulfil the requirements to become an insurance broker, you must put together a file and populate it with the following documents:

1. Certificate of incorporation of your company
2. Memorandum of Association
3. Articles of Association
4. Qualification documents of the Principal officer
5. Address proof of the premises of business
6. Qualification documents of the employees of the insurance broking firm
7. Insurance Broker Exam Completion Certificate
8. Net worth certificate of the company
9. An audited balance sheet of the company

Step 5: Apply online for the Insurance Broker License

You can apply online via the IRDA portal. The process is self-explanatory. In fact, the portal will provide you with a guide that will help you file the application online. The process is as follows:

1. Go to the official IRDA portal
2. Select the Insurance Broker option
3. Start filling the application form
4. Upload the documents
5. Pay the insurance broker license fee
6. Submit the application

After receiving your request, the IRDA will assess your application form and documents. Once the assessment is complete, you will receive the insurance broking license as an attachment.

Conclusion

What you read here are the five steps for becoming an insurance broker in India. If you have any further queries, our IRDA consultants are at your beck and call.

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