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Insurance Broker License

An Insurance broker license is issued to an expert and qualified individuals or firm acting through its directors or Partners or workers with knowledge on insurance related laws as profundity information on insurance items. They prompt individuals on their insurance need.

  • In-Principle Approval from IRDA
  • Insurance Broker Company Registration
  • Business Plan for next 5 years
  • Operation plan, Organization policy
  • Advisory on Work Flow and SOP
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Overview of Insurance Broker License

An Insurance broker license is issued to an expert and qualified individuals or firm acting through its directors or Partners or workers with knowledge on insurance related laws and has sufficient information on insurance items. They prompt individuals on their insurance need. An insurance broker offers proficient types of assistance to its customer and acts as mediators between an insurance agency and an individual who is searching for buying an insurance policy.

Further an Insurance broker can be classified in three types

Insurance Broker License Types
  • Direct Insurance Broker

    Sales and acquirement of the business of Insurance allows its customer to purchase an insurance policy from its site or software and avail the benefit of commission from the insurance agency whose policy has been sold

  • Composite Insurance Broker

    It is a sort of Insurance Broker License who requests and organizes insurance or potentially reinsurance for its customers with safety net providers as well as reinsurers situated in India or potentially abroad, in return for compensation or fees.

  • Reinsurance Broker

    It is a sort of insurance Broker License who requests and layout insurance for its customers with back up plans and additionally reinsurers situated in India or potentially abroad, in return for compensation or fees.

What is Insurance Broker License?

Insurance Broker License is regulated and operated by Insurance Regulatory and Development Authority (IRDA). IRDA also manages the functions and operations of Insurance Broker License.

An Insurance Broker is a person or a company which is registered under IRDA and provide advisory on the matters related to insurance. It helps the client in the process of getting insurance coverage from an insurer. An insurance broker is a qualified, expert and professional individual who works with the motive to provide insurance cover. An insurance broker acts as a bridge between the insurance company and the clients who are wandering in the search of purchasing an insurance policy. According to these guidelines Insurance Broker License should fall in any of the accompanying classifications:

  • Direct Insurance Broker License – Capital required Rs 75 Lac
  • Composite Insurance Broker License – Capital required Rs 5 Crore
  • Reinsurance broker License – Capital required 4 Crore

Who can apply for Insurance Broker License?

List of people who can apply for Insurance Broker License in India:

  • Any company registered under the Companies Act, 2013
  • Any registered co-operative society established according to the norms of Co-operative Societies Act, 1912 or any other similar law
  • Any LLP registered under Limited Liability Partnership Act, 2008
  • Any other person acknowledged by the Authority

In case if Insurance Broker License applicant happens to be a registered LLP then none of the following can be a partner of the same

  • Non-resident entity
  • Any foreign LLP registered as per the law of foreign country
  • Any person who reside outside India

Minimum Financial Requirements for Insurance Broker License

An applicant with the following minimum capital requirement can apply for the insurance broker registration:

Minimum Financial Requirements for Insurance Broker License
  • For Direct Broker- Rs 75 lakh
  • For Reinsurance Registration- Rs 4 Crore
  • For Composite Broker- Rs 5 Crore

Net Worth Requirement

During the process of registration of Insurance Broker License it is necessary for Insurance Broker to maintain the minimum net worth of

  • For Direct Broker- Rs 50 Lakh
  • For reinsurance and composite Broker- 50% of the minimum capital requirement

Deposit Requirement

It is necessary for the applicant to deposit the certain amount with the scheduled bank. Make sure to deposit the amount before applying for the application of registration and during the course of Insurance Broker License.

  • Direct Broker- Rs 10 Lakh
  • Reinsurance and Composite Broker- 10% of the minimum capital requirement

Functions of Insurance Broker License

Functions of a Direct Broker

  • Acquiring complete information related to business and risk management strategy of the client;
  • Getting familiar with the client’s business nature and underwriting information which will further help you in explaining business related things to insurer and others;
  • Giving suggestion related to suitable insurance cover and terms;
  • Having complete knowledge about the available insurance markets;
  • Insurer provides the quotation regarding the consideration of client.

Functions of a Re-Insurance Broker

  • Familiarizing with the client’s business nature and risk retention strategy;
  • Maintaining clear and healthy records of the insurer’s business;
  • Giving advice on the matters pertaining to insurance covers and different kinds of insurance covers available in the international insurance and reinsurance markets;
  • Creating database of available reinsurance markets which also covers solvency ratings of individual reinsurers;
  • To protect reinsurance, delivering risk management services;
  • Proposing a reinsurer or a group of reinsurer;
  • Doing negotiations with a reinsurer on the client’s behalf;

Functions of a Composite Broker

Composite broker conducts all the functions performed by Direct Broker and Re-insurance broker.

Documents Required for Insurance Broker License

It is essential to submit all the necessary documents and information in order to obtain Insurance Broker License.

Following are the documents that an applicant has to submit along with the information specified in Form C of Schedule I of the IRDA (Insurance Broker) Regulations, 2018:

  • Form B is required to fill the application for Insurance Broker License
  • Copy of MOA and AOA
  • Data identifying with Principal Officer and whether they fulfil the fit and legitimate measures must be introduced in Form G of Schedule I. What's more, ensure that necessary preparing compliances are satisfied before the application is submitted.
  • A composed affirmation from the Principle official expressing that they alongside directors/accomplices and other key administrative work force are not experiencing any exclusions expressed in segment 42 D of the Act.
  • Complete subtleties of directors/accomplices, advertisers and other key administrative staff.
  • List of at least two qualified agents with their capabilities. This is significant 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.

Insurance Broker License Registration Procedure

  • 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

Insurance Broker License Fee

The fee for Insurance Broker License is submitted in the schedule I of Form D.

Non-refundable Application Fees

  • For Direct Broker – Rs. 25,000
  • For Reinsurance Broker – Rs. 50,000
  • For Composite Broker – Rs. 75,000

Registration Fees for Fresh Registration

  • For Direct Broker – Rs. 50,000
  • For Reinsurance Broker – Rs. 1,50,000
  • For Composite Broker – Rs. 2,50,000

Renewal Fees for a period of 3 years

  • For Direct Broker – Rs. 1,00,000
  • For Reinsurance Broker – Rs. 3,00,000
  • For Composite Broker – Rs. 5,00,000

Insurance Broker License Validity and & Renewal

The certificate of Insurance broker license is granted 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.

Frequently Asked Questions

Broker gives a wide range of Insurance from all general society and privately owned businesses under one rooftop. Not at all like specialist who is tied with one organization, agent isn't limited by one organization. Intermediary is an autonomous individual and has loaded with information pretty much all the Insurance items and approaches offer by the insurance agencies.

In India Insurance Broker License just as their tasks is managed by guidelines gave by the Insurance Regulatory and Development Authority (IRDA). In 2018, a refreshed adaptation of IRDA (Insurance Broker) Regulations, 2018 were given by the IRDA.

  • Any company registered under the Companies Act, 2013
  • Any registered co-operative society established according to the norms of Co-operative Societies Act, 1912 or any other similar law
  • Any LLP registered under Limited Liability Partnership Act, 2008
  • Any other person acknowledged by the Authority

It is quite basic to have adequate measure of inclusion for every protection approach. Indeed, even before focusing in on the Sum Insured as respects any benefit or property protection, the estimation of the advantage dependent on advertise worth or reestablishment worth ought to be fundamentally thought about. In the event that the Sum Insured doesn't meet prerequisites, the rate speaking to the uncovered fragment of the advantage must be fundamentally borne by the protected.

The certificate of Insurance broker license is granted 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.

ans

  • Familiarizing with the client’s business nature and risk retention strategy;
  • Maintaining clear and healthy records of the insurer’s business;
  • Giving advice on the matters pertaining to insurance covers and different kinds of insurance covers available in the international insurance and reinsurance markets;

Underwriting alludes to the procedure that a money related specialist co-op utilizations to evaluate the way toward giving access to their item like protection to a client. Contingent upon the evaluation, the hazard for protection contract is acknowledged and the top notch rate is settled on.

Non-refundable Application Fees

  • For Direct Broker – Rs. 25,000
  • For Reinsurance Broker – Rs. 50,000
  • For Composite Broker – Rs. 75,000

Registration Fees for Fresh Registration

  • For Direct Broker – Rs. 50,000
  • For Reinsurance Broker – Rs. 1,50,000
  • For Composite Broker – Rs. 2,50,000

Renewal Fees for a period of 3 years

  • For Direct Broker – Rs. 1,00,000
  • For Reinsurance Broker – Rs. 3,00,000
  • For Composite Broker – Rs. 5,00,000

In a protection approach, the deductible or overabundance is the bit of any case that isn't secured by the protection supplier. It is typically cited as a fixed sum and is a piece of most approaches covering misfortunes to the policyholder. The deductible must be "met", that is, paid by the protected, before the advantages of the approach can apply.

Commission is the most widely recognized type of payment by the insurance agency to the dealer who puts your business. This commission is paid for the work the broker did, including documentation and so on. A representative organization charge may likewise be charged. If so, documentation with this impact will appear on the receipt. Nonetheless, a few brokers mastermind with their customers to charge an expense for administration.

It is a sort of insurance Broker License who requests and organizes insurance or potentially reinsurance for its customers with safety net providers as well as reinsurers situated in India or potentially abroad, in return for compensation or fees.

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Sakshi Sharda
| Date: 17 Apr, 2020

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