Because it shields people and companies against unanticipated dangers, insurance is an essential part of financial security. Nevertheless, the selling of insurance is not exempt from rules and specifications. Selling insurance without the insurance license is prohibited in the majority of jurisdictions and has serious repercussions. The process of obtaining a license guarantees that brokers and agents have the skills and information required to provide clients with sound advice and ethically market insurance products. This introduction examines the significance of holding the right licenses in the insurance sector and emphasizes the dangers of doing business without the required authorization. Comprehending and complying with regulatory mandates safeguards consumers while fostering professionalism and ethics in the insurance industry.
Importance of Insurance License
Getting an Insurance Broker License is very important for brokers and agencies since it creates a sense of confidence in the minds of the general public, which helps them take the services through those agents or brokers. With an insurance license, the insurance company has the chance to propagate its business more and gain a competitive edge in the market compared to those operating without any licensing. It helps them build brand value and attract more customers by properly selling them insurance plans as per their needs. The license ensures that the person dealing in the field is educated enough to guide others on what is best for their needs and which insurance option they should opt for better results.
Role of the Insurance Regulatory and Development Authority
The Insurance Regulatory and Development Authority plays a vital role in governing the Insurance Company License. It looks at the compliance and the working methodology adopted by these companies. They are responsible for the smooth conduct of insurance-related matters with the help of registered agencies that have trained manpower to assist individuals opting to take insurance coverage. They are the ones responsible for approving the licenses of entities and also for the revocation of an Insurance Company License if there is any non-compliance involved in their business activities. All the conducts of the insurance agents and the companies are monitored by them, and in case any fraud has been reported to them by any customer, then they take the charge and define the penalties on the customer’s successful claim. It is the country’s governing department of the insurance sector.
Why is it important to have an insurance license?
To operate legally in the insurance market, one must have an insurance license. Most jurisdictions prohibit the sale of insurance without an Insurance License, and those who are discovered selling insurance without the required authority may be subject to harsh punishment, such as fines and even criminal prosecution. By obtaining a license, agents and brokers can be certain that they have completed the necessary coursework and training, proving their expertise in providing clients with insurance-related advice. Professionals who are licensed follow legal regulations, shielding clients from bad advice or dishonest business practices. Moreover, insurance licenses offer a framework for accountability because regulating organizations hold licensed individuals to particular ethical and professional norms. In general, to maintain consumer protection requirements and conduct business lawfully within the insurance industry, one must get an license.
Types of Insurance Licenses in India
The types of Insurance Licenses in India are –
Insurance Broker License
An insurance broker license is needed by the individuals or entities that act as an intermediary between the insurance buyer and the insurance company. They need to get the license to function properly in the market without any legal compliances involved.
Insurance Company License
The Insurance companies must get the Insurance Company License to function freely in the market, or else the regulatory institutions will take necessary actions against them. They should have the license along with trained individuals who can assist the customers in getting insurance coverage based on their needs and premium paying capacity. Any untrained individual would not be able to guide the customers to a suitable insurance plan.
Individual Insurance Agent License
It is required by the individuals who sell the insurance individually on behalf of the insurance company. They must go through the training program conducted by IRDAI to get the license of Individual Agent License.
Corporate Insurance Agent License
Corporate firms can also get a license from the IRDAI to sell insurance to customers after obtaining training in the subject matter. These corporates can be Banks, NBFCs, and other firms associated with similar lines of business.
Third-Party Administrator License
Popularly known as TPA service providers, they are the entities that deal with the claims and procedures of claiming insurance money. These are links between insurance companies and the people who claim insurance money. They also need to get the license through IRDAI to commence the proceedings. Failing to do so can lead to hefty penalties or even the cancellation of the license.
Role of Insurance Broker in India
The roles of an insurance broker are –
- To advise the clients about suitable insurance plans based on their needs, income level, and suitability.
- To look for suitable plans for the client.
- To help clients claim the insurance money in case of need.
- To add policies in the packages.
- To look for other insurance and study them to advise the client in the future if the need arises.
- To carry out the administrative work of the clients.
- To offer expertise to clients on various policies.
Conclusion
To sell insurance, you should have a license, or else there can be heavy penalties involved by the administration. The insurance broker should have the license and the necessary training to sell the insurance across the nation. The customer should be aware of these things and should first verify if the agent has a license or not. If not, then he/she should avoid seeking guidance or taking any policies from that agent as he/she cannot be trusted and may pose a threat of fraud. To run the business fluently, one should get a license from the authorities and commence it in the market, as it will help maintain the customer base and the competitive edge in the market.
Corpbiz can help brokers get the Insurance broker license and the companies get the Insurance Company License. We are an expert in providing these services and our past and current customers can vouch for that. We have many experienced and talented individuals who can provide you with assistance from basic paperwork to getting the license without much trouble.
Frequently Asked Questions
What is the procedure for granting an Insurance License?
The process for the grant of an insurance license involves an application made in Form B Schedule I of the IRDAI regulations. This application should be attached with relevant documents that are mentioned in Form-C Schedule I of the IRDAI regulations. These documents should be submitted with the application after paying the prescribed fee of registration mentioned in Form-D Schedule I of the IRDAI regulations.
Why is Insurance License necessary?
Getting an Insurance Broker License is very important for brokers and agencies since it creates a sense of confidence in the minds of the general public, which helps them take the services through those agents or brokers. With an insurance license, the insurance company has the chance to propagate its business more and gain a competitive edge in the market compared to those operating without any licensing.
What is the application fee for different brokers?
The application fee is different for different types of brokers. These are –
· Rs 25000 has to be paid by someone wanting to get a direct broker license.
· Rs 50000 has to be paid by someone wanting to get a re-insurance broker license.
· Rs 75000 has to be paid by someone wanting to get a composite broker license.Who are third-party administrators?
Popularly known as TPA service providers, they are the entities that deal with the claims and procedures of claiming insurance money. These are links between insurance companies and the people who claim insurance money. They also need to get the license through IRDAI to commence the proceedings. Failing to do so can lead to hefty penalties or even the cancellation of the license.
What happens when the application is rejected?
The application for a grant of license can be rejected if any requirements are not fulfilled as per the IRDAI regulations. This refusal of the application should be communicated to the applicant within 30 days of such refusal. The new application can be made after one year of such rejection by following the same process.
What is the relevance of Form-F Schedule I?
Form-F Schedule I is required to be filled out to provide the details related to the Principal Officer.
What is the validity of the Insurance License?
The validity of the insurance license is three years, and after that, the applicant has to renew the license with the authority. This license is mandatory to have, and not furnishing it with the authority before the commencement of the business could lead to various fines and penalties.
When can we file for renewal of the Insurance License?
For renewal of the insurance license, the applicant has to fill out the form with the form and submit it to the relevant authorities before 30 days of its expiry. The renewal request has to be made in Form K of Schedule I of the IRDAI regulations.
What happens if the insurer hasn’t renewed the license within 60 days of the expiry of the license?
If the insurer hasn’t renewed within 60 days of the expiry of the license, then the renewal request would be considered only after one year. Meantime till the license is renewed, the insurance company or broker cannot be involved in any business transactions. Its business activities have to be stopped until then.
Till when can an insurance broker apply for license renewal?
The insurance broker can apply for renewal only till the 90 days of the expiry of the license. After 90 days have passed, a fresh application for the license has to be made.
Read Our Article: How To Become An Insurance Broker In India?
