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Insurance Broker License Services

Help in getting IRDA’s in-principal approval for Insurance Broker License
Advisory on SOP and workflow of the new company
Compilation of all necessary documents for registration
Applying in IRDA for registration of new Insurance broker company
Regular updates regarding compliance norms of IRDA
Getting the Insurance broker license from IRDA

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    Overview of Insurance Broker License

    There are ample insurance-related products available in the market in current times. People might get confused before choosing to buy a suitable insurance policy for their needs. An insurance broker company guides people on choosing the right insurance product for their requirement and so, helps people in making the right financial decision. An insurance broker is kind of a middleman between the insurance company and the client requiring insurance. These insurance brokers assist people in buying the most appropriate insurance product according to their needs. To start the insurance brokerage service, any new firm needs to apply for an insurance broker license from IRDA. They also need to meet insurance broker requirements.

    An insurance broker company acts as an intermediary between the insurance companies and the clients requiring insurance services. An insurance broker license is a prerequisite to start this kind of venture. These companies are regulated by the Insurance Regulatory and Developmental authority of India (IRDAI). Promoters willing to start an insurance broker company need to apply to IRDAI to get an Insurance broker license for their new company. At MUDS, we provide the complete range of services to promoters willing to get their insurance broker certification.

    What Are Different Types of Insurance Brokers?

    Types of Insurance Brokers

    The insurance brokers can be broadly classified under the following three categories:

    Composites Insurance Broker: A composite insurance broker is responsible for giving insurance-related services to buyers of insurance products like life insurance or general insurance. However, the IRDAI grants composite insurance license very selectively.
    Reinsurance Broker: These are the activities performed by the Reinsurance broker.
    1. Selling reinsurance products.
    2. Maintaining marketing stats of reinsurance products.
    3. Negotiating on behalf of the buyer before buying reinsurance product.
    Direct Insurance Broker: These insurance brokers assist clients in buying new insurance products by informing them about the various insurance products available in the market. The direct insurance brokers also assist clients in paying their premium or opening an e-insurance account for their client.

    Regulatory Laws for Insurance Broker Companies

    Regulatory Laws for Insurance Broker Companies
    The insurance broker companies are regulated under the provisions of the following act:
    The Insurance Regulatory Development Authority of India Act, 2018;
    The Insurance Regulatory Development Authority Act, 1999.

    Eligibility Criteria to Get Insurance Broker License

    Following criteria are needed to be met by a firm to get the insurance brokers license or an individual to become an insurance broker.

    Entities that are eligible to apply,
    1. A co-operative society registered under the Co-operative Societies Act, 1912.
    2. Any company registered through the Companies Act, 2013.
    3. Any person recognised by the regulatory authority.
    4. A Limited Liability Partnership (LLP) firm registered under the LLP Act, 2008.

    For LLPs, the following are not eligible to become a partner,

    (Any foreign LLP registered under the law of foreign company, non-resident entity and, any person residing outside India is not eligible to become a partner for LLPs Applying for Insurance Broker License).

    Requirements to get the Insurance broker License
    Type of Broker Financial Requirement Net-Worth Requirement Deposit Requirement in a scheduled bank
    Composite Broker Rs. 5 Cr. 50% of the Minimum Capital Requirement 10% of the Minimum Capital Requirement
    Direct Broker Rs. 75 Lakh. Rs. 50 Lakh. Rs. 10 Lakh.
    Reinsurance Broker Rs. 4 Cr. 50% of the Minimum Capital Requirement 10% of the Minimum Capital Requirement

    Functions of an Insurance Broker

    Composite Broker: A composite broker can perform the functions of both the reinsurance broker and direct broker.
    Direct Broker:
    1. Keeping track of all insurance products and businesses in the market.
    2. Devising risk retention strategy for customers and advising them about the appropriate insurance policy for them.
    3. Offering suitable quotations to clients about insurance policies.
    Reinsurance Broker:
    • Devising risk management strategy for the client and keeping records of the insurer’s business.
    • Advising on matters related to reinsurance markets and other matters related to insurance covers.
    • Maintain a database of available insurance markets with insolvency ratings of every insurer.
    • Negotiating with the reinsurance company on behalf of the customer.

    Checklist and Documents Required for Insurance Broker License

    This is the checklist of things a company should keep updated before applying for insurance broker registration:

    The name of the insurance broker company applying for a license should end with the word “Broking”. The Memorandum of Association of the company must mention insurance broking activities as a primary objective.
    The company must fulfil all the financial, deposit and capital requirement for the insurance broker registration.
    The foreign investment in the company must not exceed the limit of 26% of the paid-up capital.
    20% if the initial capital of the company must be deposited in the bank.
    The principal officer of the company must have qualified the brokers’ exam and has gone through the training. Also, the company must have hired two other employees who meet all the necessary qualification and training requirement for the broker’s license.
    The infrastructure of the company must be suitable to support day to day activities of the insurance broker company.
    Document Required

    Document Required To Be Submitted With The Form C Of Schedule I Of The IRDAI (Insurance Brokers) Rules 2018

    Form B needs to be filled to apply for the Insurance brokers license.
    A copy of Article of Association with Memorandum of Association.
    Information about the principal officer should be filled in Form G schedule I. The officer must have passed the broker’s exam and had training.
    A declaration must be attached expressing that the PO, key administrative officers, and directors/partners are not excluded in the Insurance Act’s section 42 D.
    All details of directors, partners, and other administrative personnel.
    Details of two qualified agents with their respective qualifications.
    List of all shareholders and the details of principal bankers.
    A copy of the resolution passed by the company’s board for promoting and investing in the company.
    Copy of audited balance sheet and other details of the company.

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      Procedure to Get the Insurance Brokers License

      Procedure to Get the Insurance Brokers License

      Step 1. Application Submission

      The applicant company must submit Application Form B of Schedule I with the documents mentioned above and the necessary application fee. It also needs to submit the application form with documents to IRDAI.

      Step 2. Documents Verification

      IRDAI will verify the documents and could raise queries asking for more details or any other document regarding the company. If the application lacks some documents, then it will ask to submit them within 30 days of application submission.

      Step 3. Issuing In-principal Approval to Company

      Once all the documents are verified by IRDAI and the application satisfies all the necessary standards, then it will give in-principal approval for insurance broker company registration.

      Step 4. License Fee Payment

      Once the in-principal approval is achieved a company must comply by the additional requirements for getting the broker’s license and also pay the license fees to the regulatory authority.

      Step 5. Issuance of Certificate of Company Registration

      After meeting all the necessary compliance as necessitated by IRDAI Regulations for Insurance Broker, 2018 and verification of all the documents, the authority will grant a COR (certificate of registration) to the broker company. The certificate is issued in the FORM J of Schedule I in the IRDA regulations.

      Fee for Broker’s License:

      A license granted to a company is valid for 3 years and after that, it needs to be renewed by filing a renewal application. Fee for License Application is as mentioned in the table given below,

      Type of Broker License Non-Refundable Application Fee Registration fee for a fresh application Renewal Fee for a period of 3 years
      For Direct Broker Rs. 25000 Rs. 50000 Rs. 100000
      For Reinsurance Broker Rs. 50000 Rs. 150000 Rs. 300000
      For Composite Broker Rs. 75000 Rs. 250000 Rs. 500000

       

      Alternately Call our Legal Expert Now For Free Consultation at 09599653306

      Frequently Asked Questions on Insurance Broker License Services

      Principal Officer (PO) is an individual who has a higher role in the Insurance Broker Business. The PO is typically a director, shareholder, CEO, or Full-time director. These individuals perform duties associated with insurance/re-insurance business administration.

      These are the categories where insurance brokers license can be granted. 

      • Direct Broker (Life Insurance)
      • Re-insurance Broker
      • Direct Broker (General Insurance)
      • Composite Broker
      • Direct Broker (Life Insurance & General Insurance)

      The following individual or entities can’t be considered for an insurance brokerage licence:

      It the entity is an LLP then they can’t apply for a license if they are,

      • A Non-Resident Individual/entity.
      • A Foreign Entity; and
      • A foreign partnership firm registered under the laws of a foreign country.

      A broker is an individual with the necessary experience and qualifications to handle the insurance brokerage business. A director can also act as a broker for any insurance business if he has the requisite qualifications to manage the insurance business.

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