Overview
An insurance broker license is awarded to a qualified and experienced individual or business. This entity, through one of its directors, partners, or employees, must demonstrate a thorough knowledge of insurance regulations and a solid understanding of insurance products. The broker’s role involves assessing people’s insurance needs. Acting as an intermediary, an insurance broker facilitates the connection between an insurance company and a potential policyholder, offering expert assistance to both sides.
Requirements for Insurance Broker License
To obtain an Insurance Broker License, the following requirements must be met:
1. Legal Structure:
The applicant must be a company incorporated under the Companies Act, 2013.
Alternatively, the applicant can be a legally recognized co-operative society under the Co-operative Societies Act of 1912 or similar legislation.
An LLP registered under the Limited Liability Partnership Act of 2008 can also apply.
Other individuals or entities as recognized by the authority.
2. Capital Requirements:
Direct Insurance Broker License: Minimum capital requirement of Rs 75 lakh.
Composite Insurance Broker License: Minimum capital requirement of Rs 5 crore.
Reinsurance Broker License: Minimum capital requirement of Rs 4 crore.
3. Compliance:
4. Residency Restrictions:
If the applicant is an LLP, no partner can be an entity that is not a resident of India.
No foreign limited liability partnership or individual residing outside of India can be a partner in the LLP.
5. Professional Expertise:
6. Registration and Documentation:
7. Business Plan:
Meeting these requirements is essential for obtaining an Insurance Broker License and ensuring compliance with regulatory standards.
Functions of Insurance Broker License
The functions of an insurance broker license are outlined below:
Functions of a Direct Broker
Acquiring thorough knowledge about the client’s company and its risk management approach.
Understanding the client’s business and underwriting information to clarify business-related issues to the insurer and others.
Making recommendations on appropriate insurance coverage and terms.
Having a comprehensive understanding of the available insurance marketplaces.
Presenting quotes from insurers for the client’s consideration.
Functions of a Re-Insurance Broker
Understanding the client’s business model and risk retention strategy.
Maintaining clear and accurate records of the insurer’s operations.
Providing advice on insurance coverage and the various types of insurance covers available in the international insurance and reinsurance markets.
Creating a database of available reinsurance markets, including solvency ratings for individual reinsurers.
Offering risk management services to secure reinsurance.
Negotiating with reinsurers on behalf of the client.
Functions of a Composite Broker
Documents Required for Insurance Broker License
To apply for an insurance broker license, the applicant must provide the following essential documents and information as specified in Form C of Schedule I of the IRDA (Insurance Broker) Regulations, 2018:
1. Application Form: Complete and submit Form B.
2. Corporate Documents: Include a copy of the Memorandum of Association (MOA) and Articles of Association (AOA).
3. Principal Officer Information: Provide details in Form G of Schedule I regarding the Principal Officer and their qualifications.
4. Compliance Check: Ensure that all relevant preparation requirements are met before submitting the application.
5. Written Confirmation: A written confirmation from the Principal Officer stating that they, along with directors, partners, and other senior management staff, are not subject to the exclusions outlined in Section 42 D of the Act.
6. Personnel Details: Complete details of directors/partners, marketers, and other key management personnel.
7. Certified Agents: List at least two certified agents along with their qualifications, as they will be responsible for handling all insurance requests and acquisitions post-registration.
8. Financial Information:
Insurance Broker License Fee
The fees for the Insurance Broker License are detailed in Schedule I of Form D.
Non-Refundable Application Fees:
Direct Broker: Rs. 25,000
Reinsurance Broker: Rs. 50,000
Composite Broker: Rs. 75,000
Registration Fees for Fresh Registration:
Direct Broker: Rs. 50,000
Reinsurance Broker: Rs. 1,50,000
Composite Broker: Rs. 2,50,000
Renewal Fees for a Period of 3 Years:
Direct Broker: Rs. 1,00,000
Reinsurance Broker: Rs. 3,00,000
Composite Broker: Rs. 5,00,000
Insurance Broker License Renewal and Validity
The insurance broker license certificate remains valid for three years from the date of issuance. An application for renewal must be submitted at least one month before the expiration date of the license.
Renewal Process:
Applications to renew an insurance broker’s license must be submitted using Schedule I, Form K of the regulations.
If the application is submitted after the license has expired but within its validity period, a fee of Rs. 100/- must accompany the application.
For delayed submissions beyond the expiration date but within 60 days, a fee of Rs. 750/- applies.
Applications received more than 60 days after expiration can only be considered one year later. During this period, the broker cannot conduct business or solicit new clients.
After 90 days of the certificate’s expiration, the broker cannot apply for renewal.
Post-Expiration Activities:
Following expiration, brokers can continue to service existing policyholders but cannot engage in new business activities.
The renewal application process mirrors that of a new license application.
Denial Notification.
Applicants must be notified if their application for initial issuance or renewal is denied.
What is Insurance Broker License?
The Insurance Regulatory and Development Authority of India (IRDAI) regulates and oversees the insurance broker license. The IRDAI monitors the responsibilities and operations of insurance brokers, who must be registered with the IRDAI to provide advisory services. An insurance broker, whether an individual or a corporation, aids customers in securing insurance coverage from insurers. These brokers are knowledgeable, skilled professionals dedicated to facilitating insurance coverage. They act as intermediaries between clients seeking insurance policies and insurance companies.
According to IRDAI regulations, an Insurance Broker License is classified into three categories:
Direct Insurance Broker License – Capital Required: Rs 75 Lakh
Composite Insurance Broker License – Capital Required: Rs 5 Crore
Reinsurance Broker License – Capital Required: Rs 4 Crore
Who can apply for Insurance Broker License?
The following individuals or organizations are eligible to apply for an Insurance Broker License:
Any company incorporated under the Companies Act, 2013.
Any legally recognized co-operative society established under the Co-operative. Societies Act of 1912 or similar legislation.
Any LLP registered under the Limited Liability Partnership Act of 2008.
Any other individual recognized by the authority.
If the application for an Insurance Broker License is submitted by an LLP registered under the Act, the following entities cannot be partners:
Any entity that is not a resident.
Any foreign limited liability partnership registered under foreign laws.
Any individual residing outside of India.
Registration Procedure for Insurance Broker License
The procedure to apply for Insurance broker registration is mentioned below:
To apply for an Insurance Broker License:
Form B Submission: Complete Form B in Schedule I of the regulations.
Application Fee: Submit a non-refundable application fee.
Required Documents: Provide all relevant documents.
Post-application review process:
Additional Information: The authority may request further information, documents, or consent from the applicant if needed.
Response Time: Supply the requested data, reports, or explanations within 30 days of communication.
Approval process:
In-Principle Approval: If all requirements are met, the authority will grant in-principle approval for registration.
Additional Conditions: Agree to additional conditions and submit insurance broker license fees online.
Final approval:
Why eStartindia for Insurance Broker License?
eStartIndia offers support to individuals and organizations seeking an Insurance Broker License from the Insurance Regulatory and Development Authority of India (IRDAI). Aspiring insurance brokers can benefit from professional advice and consultation from eStartIndia, a specialized company in insurance regulations and licensing. Additionally, eStartIndia assists in preparing and completing the license application, ensuring all necessary documents are gathered, organized, and compliant with regulations set by IRDAI.
To aid applicants in structuring their companies in accordance with IRDAI requirements, eStartIndia provides legal and compliance services. We also facilitate the development of risk management plans and offer auditing services to ensure ongoing compliance with IRDAI standards.
