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 insurance broker license from IRDA.
An insurance broker company acts as an intermediary between the insurance companies and the clients requiring insurance services. 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 Insurance broker license for their new company. At MUDS, we provide the complete range of services to promoters willing to get their insurance company license.
The insurance brokers can be broadly classified under the following three categories:
The insurance broker companies are regulated under the provisions of the following act:
Following criteria are needed to be met by a firm to get the insurance brokers license from IRDAI.
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).
|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|
This is the checklist of things a company should keep updated before applying for insurance broker registration:
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.
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.
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.
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.
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.
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
For Reinsurance Broker
For Composite Broker
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.
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 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.