Insurance Broker License
Insurance Brokers are intermediaries between the prospective customers and insurers. To ensure that insurance and reinsurance business is transacted along proper lines, there are set out rules of conduct and licensing procedures to be followed. All brokers operating in the insurance market need to be duly licensed by IRDA and Insurance Broker License. also need to submit periodic returns reporting details of the operations.
About Insurance Broker Registration and why its required
An insurance broker license is required to ensure that entities acting as intermediaries between clients and insurance companies meet certain standards of knowledge, ethics, and professionalism. These requirements protect consumers by ensuring that brokers have a sufficient understanding of insurance products, are advised on the best coverage options for their needs, and are dealing with professionals who are held to regulatory standards and compliance.
Registration Process for Insurance Brokers with IRDAI
The insurance landscape in India is vast and
varied, offering ample opportunities for professional intermediaries to
facilitate the buying and selling of insurance products and services. Among
these intermediaries, insurance brokers play a pivotal role, acting as the
linchpin between insurance providers and consumers. Acknowledging the critical
function they serve, the Insurance Regulatory and Development Authority of
India (IRDAI) has laid down meticulous regulations for the registration and
operation of insurance brokers within the country. This blog post aims to
elucidate the process of becoming an IRDAI-registered insurance broker, delving
into the categories of brokers, registration requirements, and other essential
aspects as delineated by IRDAI.
Persons eligible to apply for the Insurance Broker License in India are as follows:
- Any company registered under the provisions of Companies Act, 2013
- Any registered co-operative society incorporated as per the norms of Co-operative Societies Act, 1912;
- Any Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008;
- Any other person recognised by the Authority.
- Non-Resident Entity;
- Any foreign Limited Liability Partnership registered as per the law of that foreign country;
- Any person who resides outside India.
Process/Procedure for Applying an Insurance Broker License
- An appropriately filled Insurance Broker License application in Form B given in Schedule I of the guidelines is to be put together by the candidate with the authority alongside the non-refundable application expense and required documents.
- After examination of the application for Insurance Broker License if the Authority has any inquiries it can approach the candidate for data, documents or can even direct them to consent to any necessities.
- Within 30 days from the date of such correspondence the candidate is required to submit such data, report or explanation as the case is.
- In the event that after due thought of the application for Insurance Broker License and if candidate satisfies all the previously mentioned conditions then the Authority will give an in-principle approval for Insurance Broker Registration.
- After the issue of on a basic level approval, the candidate is required to agree to the extra necessities and submit Insurance Broker License expenses with the Authority either on the web.
- If the Authority is fulfilled that all the prerequisites expressed in the Act, guidelines, Rules, rules, fliers and so on are fulfilled by the candidate alongside the conditions expressed in the on a basic level approval declaration, at that point it will give a Certificate of Registration in Form J recommended in plan 1
Conditions for granting the License
Documents Required
An applicant needs to submit the following documents along with the information specified in Form C of Schedule I of the IRDA (Insurance Broker) Regulations, 2018:.
- Form B
- MoA/AoA
- Copy of Memorandum of Association (MoA) or Article of Association (AoA)
- Copy of shareholders agreement, if any.
- A self-declaration in respect of promoters/shareholders/partners that the funds being invested as equity capital are out of their own earnings or savings and not out of borrowings. Form F & G of IRDAI (Insurance Brokers) Regulations, 2018 with regard to directors, principal officer and key management person of the applicant company.
- Principal Officer to submit a declaration that the applicant (directors/partners, principal officer and key management personnel of the company) are not suffering from any of the disqualifications specified under section 42 D of the Act.
- Details of infrastructure including IT infrastructure along with supporting evidence thereof like ownership/lease agreement papers with regard to office space/equipment/trained manpower, etc. for the registered office with the photographs of premises and the future planning for opening branch office at various locations in the country and the estimated time frame.
- List of minimum two qualified agents with their capabilities as they will be answerable for all the requesting and acquiring insurance business after enlistment.
- Complete information of bank account Subtleties of Principal Bankers alongside the statutory advisors
Validity for certificate of registration for license
The certificate is valid for three years from the date of issuance. An application for the renewal of registered insurance broker license is filed at least one month prior the expiry of these three years of registration.
Renewal Process
The application for renewal of certificate of registration shall be submitted as follows:
| Case | No. of Days | Additional Fee |
|---|---|---|
| 1 | At least 30 days before the expiry of certificate of registration (CoR). | Nil |
| 2 | During 30 days before the expiry of certificate of registration | Rs. 100/- |
| 3 | After the date of the expiry of certificate of registration upto a period of 60 days of the expiry of CoR. | Rs. 750/- plus reason for delay |
An insurance broker is allowed to submit the application for renewal 90 days prior to the expiry of CoR (Certificate of Registration)
FAQs
There are five categories of insurance broker which are
(i) Direct Broker (Life),
(ii) Direct Broker (General),
(iii) Direct Broker (Life & General),
(iv) Reinsurance Broker, and
(v) Composite Broker.
RoC mandates that the use of word “Insurance Broker” or “Insurance Brokers”, or “Insurance Broking” in the nomenclature of the proposed company requires “No Objection Certificate” from the respective regulator.
For seeking No Objection Certificate the applicant has to submit-
a) Covering letter in which it should be mentioned the purpose of letter.
b) Copy of availability of name of proposed broking company filed with Roc
c) Copies of Identity proof and address proof of proposed
shareholders/directors of the proposed company.An applicant is required to register in the IRDA portal where user name and password would be generated by the system and sent to the user in the registered e-mail id.
Submit the application online by accessing the website: http://www.irdabap.org.in
The application for new broker’s registration shall be accepted only through on-line mode. Step-by-step procedure for the registration of new broker has been explained in user manual, which is enclosed at http://www.irda.gov.in
a) http://www.irda.gov.in – Go to icon “other links” wherein click on icon “online system for brokers registration and returns filing”.
b) http://www.irdabap.org.in – Go to icon “Brokers” in the landing page, further, click on “Help for License Submission”.
The details are as under:
MoA/AoA
Copy of Memorandum of Association (MoA) or Article of Association (AoA)
If applying for direct broker, the main object is “To act as a Direct Broker under the IRDA (Insurance Brokers) Regulations, 2018 as amended from time to time”.
If applying for reinsurance broker, the main object is “To act as a Reinsurance Broker under the IRDA (Insurance Brokers) Regulations, 2018 as amended from time to time”.
If applying for composite broker, the main object is “To act as a Composite Broker under the IRDA (Insurance Brokers) Regulations, 2018 as amended from time to time”.
The AoA shall not provide for-
(1) issuance of shares of any type other than equity and/or with differential voting rights, &
(2) allotment of shares in a consideration other than cash.
In case, the AoA of an entity provide for any of the above it is advised to kindly amend it suitably.
The Paid – up – Capital needs to be minimum Rs.75 lakhs, 400 lakhs and 500 lakhs for direct, reinsurance and composite broker respectively.
Copy of shareholders agreement, if any.
If the applicant entity is a Private Limited Company- a certificate issued by the Chartered Accountant on the overall shareholding structure of applicant entity certifying the names of shareholders, date/s of allotments of shares made to each of them, date-wise nos. of shares allotted, total nos. of shares held by each of the shareholders, its percentage in the total shareholding of the entity,share certificate nos. & folio nos. along with the authorized and paid up capital of the applicant entity.
If the applicant entity is a Limited Liability Partnership- a certificate issued by the chartered accountant on the overall partnership structure of the applicant entity certifying the names of partners, percentage of contribution in the total partnership of the entity along with the authorized and paid-up capital of the applicant entity.
If the applicant entity is a Private Limited Company- a certificate issued by the Chartered Accountant on the overall shareholding structure of applicant entity certifying the names of shareholders, date/s of allotments of shares made to each of them, date-wise nos. of shares allotted, total nos. of shares held by each of the shareholders, its percentage in the total shareholding of the entity,share certificate nos. & folio nos. along with the authorized and paid up capital of the applicant entity.
If the promoter is a company-a copy of Board Resolution permitting company to invest in the applicant entity, last three years annual reports and net worth certificate of the promoting company.
If the shareholder is individual– a copy of last three years Income Tax Returns and its computation and the net worth certificate just prior to making investment in the applicant entity with its computation which should be issued by a Chartered Accountant.
A self-declaration in respect of promoters/shareholders/partners that the funds being invested as equity capital are out of their own earnings or savings and not out of borrowings. Form F & G of IRDAI (Insurance Brokers) Regulations, 2018 with regard to directors, principal officer and key management person of the applicant company.
Principal Officer to submit a declaration that the applicant (directors/partners, principal officer and key management personnel of the company) are not suffering from any of the disqualifications specified under section 42 D of the Act.
Details of infrastructure including IT infrastructure along with supporting evidence thereof like ownership/lease agreement papers with regard to office space/equipment/trained manpower, etc. for the registered office with the photographs of premises and the future planning for opening branch office at various locations in the country and the estimated time frame.
Projection of administrative expenses, salaries and wages and other expenses, draw the revenue account, the profit and loss account and the balance sheet for the projected 3 years. An organization chart giving a complete picture of the company’s activities like IT, underwriting, risk assessment, claims settlement, marketing, accounts, back office etc.
List of experienced personnel inducted from insurance background with good knowledge and experience of working in the areas of risk assessment, underwriting and claims management etc.
Detail CV, copies of educational qualifications along with their appointment/joining letters of the people, so selected.
Form O of IRDAI (Insurance Brokers) Regulations, 2018. Any other information, which is relevant to the nature of services rendered by the applicant entity for the growth and promotion of insurance business and as deemed necessary by the Authority.
For more detail, please visit Schedule I – Form C of IRDAI (Insurance Brokers) Regulations, 2018.
For reinsurance brokers- Rs. 3,00,000/-, and
For composite broker- Rs. 5,00,000/-
The application for renewal of certificate of registration shall be submitted as follows:
| Case | No. of Days | Additional Fee |
|---|---|---|
| 1 | At least 30 days before the expiry of certificate of registration (CoR). | Nil |
| 2 | During 30 days before the expiry of certificate of registration | Rs. 100/- |
| 3 | After the date of the expiry of certificate of registration upto a period of 60 days of the expiry of CoR. | Rs. 750/- plus reason for delay |
An insurance broker is allowed to submit the application for renewal 90 days prior to the expiry of CoR.
An insurance broker is allowed to submit the application for renewal 90 days prior to the expiry of CoR.
Documents to be attached with the renewal application form are as follows:
a. Schedule I – Form K (Renewal Form)
b. DD or payment details of renewal fee.
c. Renewal checklist duly signed by a Director/Partner and the Principal Officer of the Company.
d. Shareholding pattern of the company as of now and at the time of previous renewal duly certified by a Chartered Accountant as per Schedule I – Form N.
e. Renewal training certificate for 25 hours undergone by the Principal Officer and Broker Qualified Persons.
f. Undertaking duly signed by a Director/Partner and the Principal Officer of the company as per Schedule I – Form O.
g. List of Broker Qualified Persons along-with the Branch Office they are reporting.
h. Business premium figures and list of top 10 client’s year-wise for the last three years.
i. Certificate from CA certifying compliance of Regulation 33 in respect of Reinsurance/Composite Insurance Brokers.
j. Any other documents specific to the applicant.
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