Insurance Broker License

Insurance Broker License - Overview

The Insurance Broker license is an authorized license issued by the Insurance Regulatory and Development Authority of India (IRDAI). IRDAI has formulated laws for any entity looking to become an insurance broker in India. An applicant entity becomes bound by those rules once it obtains the broker license for insurance solicitation and procurement.

As per the Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2018, an insurance broker is referred to as a business entity that implements their knowledge about the insurance industry to act as an intermediary between those who are seeking insurance policies and those who are selling it.

Responsibilities of a Licensed Insurance Broker in India

Following are the rules associated with the IRDA broking license

• The certified insurance broker, upon obtaining the Insurance broker certificate, must only solicit insurance services in India;
• After getting insurance license, the broker must comply to the provisions of IRDA Act, 1999, its regulations and other instructions issued by the authority;
• If the applicant has provided any information to the IRDA that later turns out to be false, it is up to the broker to clarify that information;
• The broker must address the grievances of the clients within 14 days;
• The broker must only procure as many insurance policies as it can provide services for in an efficient manner;
• Those with the broker license for insurance must maintain a record in the prescribed format in which it will capture the details of all the policies sold;
• The insurance brokerage license holder must not engage with multi-marketing services at any cost;
• The Licensed Broker must comply with all the points mentioned in the Code of Conduct;
• The insurance broker must maintain a book accounts as per the specifications of the IRDA regulations.

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Requirements for Insurance Broker License Registration

Here are the key requirements to consider before applying for an insurance broker license.

1. Financial Requirements

Following is the paid-up capital contribution required for each type of insurance broker:

1. Director Brokers

• ₹75 Lakh

2. Re- Insurance Brokers 

• ₹4 Crores

3. Composite Brokers

• ₹5 Crores

Net worth requirement

When the applicant is applying for an insurance broker license online, at the time he must adhere to the following net worth requirements:

1. INR 50 Lakh for direct broker
2. In the case of reinsurance and composite brokers, 50 per cent of minimum capital is required.

Deposit requirement

Following are the deposit requirement criteria, which comes to the surface when the applicant has to submit an amount to the scheduled bank for the insurance broker license:

1. In the case of a Direct broker, a 10 lakh rupees deposit is required
2. In the case of reinsurance and composite brokers, 10% of the minimum capital requirement is required.

Once you meet the insurance broker license requirements, you can move ahead with the procedure to acquire the license.

In addition to these requirements, the licensees must be capable of adhering to the different codes of conduct formulated for Insurance brokers by the Insurance Regulatory and Development Authority of India.

2. Corporate Requirements

1. The applicant must be a company incorporated under Companies Act, 2013 or,
2. An LLP registered under Limited Liability partnership Act, or
3. A cooperative society registered under the Co-operative Society Act, 1912

3. Infrastructural Requirements

1. The applicant must have adequate office space to render insurance services
2. The applicant must have adequate manpower that matches up with the insurance policies it provides

4. Qualification requirements

1. The Principal officer of the company must have the necessary Insurance Broker Training.
2. The Principal officer should a Key management personnel of the applicant entity
3. The Insurance Sale Person must also have adequate education

Document List For Insurance Broker License

Required documents for Insurance Broker License Registration listed below. 

• Duly Filled Application (Form B).
• Fit and Proper declaration in Form G of Schedule.
• Form F of Schedule I having details of the qualified persons to manage the insurance broker business.
• Details of Promoters/Partners/Shareholders.
• Memorandum of Association (MoA) and Articles of Association (AoA) will be required if the applicant is a company.
• Certificate of incorporation of the company/LLP agreement or a Cooperative Society.
• Audited Balance Sheet of the company..
• Copy of the board resolution.
• Principal bankers details.
• Bank account details of the company/cooperative society/LLP.
• List of two agents with the required insurance broker qualifications.
• A duly filled declaration expressing that the principal officer and his or her partners don’t come under those who are excluded from applying for the insurance broker certificate.
• Principal officer details as per the instructions given by the IRDA. The principal officer must obtain the necessary insurance broker qualifications before applying for the license.
• Details of the infrastructure, including IT infrastructure along with supporting evidence thereof like ownership/lease agreement papers about the office space/equipment/trained manpower.

Types of Insurance Brokers

To become a licensed insurance broker, you need to know about the types of insurance brokers that are present. Categorically, one can split them into three types to select insurance broker specialization.

Type 1 : Direct Insurance Broker

• Direct insurance brokers act as intermediaries between reinsurers and customers after obtaining an insurance broker license.
• They assist clients in risk management, claim consultancy, insurance coverage, and remuneration or fees.
• They provide insurance advisory services due to their detailed and updated market knowledge.
• Brokers help clients obtain e-insurance policies and claims.
• They gather complete information about the client’s business and share it with the insurer.
• They assist clients in choosing the best policy and explaining different quotations.
• They help clients open their e-payment accounts and complete e-insurance policies.
• Direct brokers work on behalf of clients to provide insurance services.

Type 2 : Reinsurance Broker

• Reinsurance brokers act as intermediaries between reinsurers and insurers.
• They maintain a database of the reinsurance market.
• They advise insurance companies about international and reinsurance markets.
• They communicate the records of insurance companies to the reinsurance company.
• Their services include risk management, negotiating on behalf of reinsurers, and collecting and remitting premiums.
• They employ qualified brokers to solicit insurance policies.
• They select reinsurance companies to enhance the market capacity of insurers.
• They assist insurers with claim settlements.
• They comply with the laws and regulations of the regions.

Type 3 : Composite Insurance Broker

• Composite Brokers are a combination of direct and reinsurance brokers.
• They provide direct insurance and reinsurance services in India.
• Offer advice to clients on the right insurance cover and policy terms and conditions.
• Provide services such as insurance consultancy and risk management.
• Maintain proper records for clients.
• Negotiate claims on behalf of clients.

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How to Get Insurance Broker License

Below is complete step by step process to get insurance broker license in India. 

Once approved, the IRDAI grants you a commercial insurance broker license.

It's important to note that you won’t receive a separate license for each type of insurance you want to deal with. For example, there isn't a specific "car insurance broker license." Instead, you'll get a general insurance broker license that allows you to offer various types of insurance, including car insurance.

After receiving your license, it's crucial to follow all the rules, regulations, and codes of conduct set by the IRDAI to maintain your status as a licensed insurance broker.

Our Assistance

If you want to start your journey as an insurance broker, connecting with insurance broker license consultants at Registrationwala can be helpful. Our consultants will make the entire Insurance Broker Registration process smooth and easy for you. 

◻️ We’ll provide you with our end-to-end assistance and professional guidance throughout the entire process.

◻️ We’ll make sure you meet the eligibility requirements and ensure that your application is filled completely and without any errors. 

◻️ In fact, we will fill out the application on your behalf. 

◻️ Once the application has been filed with IRDAI, we will actively coordinate with the authority to learn about the application progress. 

◻️ Simply put, we will guide you through each and every step of getting an Insurance Broker Certificate in India.

FAQs 

Q1. Who licenses the insurance broker?

An Insurance broker is licensed by the Insurance Regulatory and Development Authority of India.

Q2. How do I become an insurance broker?

To become an insurance broker, you need to:

1. Establish a company
2. Train your principal officer,
3. And, obtain the Insurance broker license.

Q3. How can I become a Health insurance broker?

To become an health insurance broker, you must obtain the Direct Insurance broker license in India.

Q4. What are the different Insurance brokerage license requirements?

1. The applicant must be a company, LLP or society
2. The applicant entity must have enough space to run the business operations
3. The applicant must involve a principal officer responsible for overseeing the functions of insurance brokerage company.

Q5. What is a principal officer in an Insurance broker company?

The Principal officer of an Insurance broker company is the personnel that understand all the regulatory, technical and market aspects of the insurance broker business.

Q6. Who can become an Insurance broker?

Following entities have the permission of the IRDA to become an Insurance brokers:

1. A company incorporated as per the companies act, 2013
2. An LLP incorporated as per the Limited Liability Partnership Act, 2008
3. A Society incorporated per the Society Act, 1912

Q7. What is the IRDA license renewal fees?

The government of IRDA license renewal is as follows:

1. Direct broker: INR 1 lakh
2. Reinsurance broker: INR 3 Lakh
3. Composite Broker: INR 5 Lakh

It is, in many cases, same as the IRDA license fees.

Q.8 What are the conditions of Insurance broker license renewal?

1. The applicant must have followed the code of conduct pertaining to the insurance broker regulations to the tee.
2. The applicant must not violate any rules mentioned in the IRDA regulations for insurance broker.
3. The applicant must fill out the application for insurance broker license renewal as soon as the expiration of the license.