Insurance Broker

How to become an Insurance Broker in India?

calendar17 Feb, 2024
timeReading Time: 5 Minutes
become an Insurance Broker in India

An insurance broker acts as an intermediary between insurance purchasers and corporations, providing knowledge and assistance in navigating the insurance market. Unlike agents who are affiliated with individual insurers, brokers work independently and provide access to a diverse variety of insurance from numerous firms. Brokers analyze customers’ requirements and research and offer appropriate coverage alternatives, ensuring that individuals and corporations receive the best protection possible. They help you understand policy terms, handle claims, and provide continuing assistance throughout your insurance experience. Insurance brokers focus on client interests by providing impartial advice and specialized solutions that provide optimal coverage at competitive pricing. Whether it’s car, home, life, or business insurance, brokers play an important role in assisting customers in making educated decisions to protect their assets and efficiently minimize risks.

Requirements for Registering as an Insurance Broker

There are certain requirements for Registering as an Insurance broker that need to be complied with to become an insurance broker. These are-

Corporations Allowed to be registered as an insurance broker

  • Company registered under the Companies Act, 2013 or Companies Act,1956.
  • Partnership firm registered as per the LLP Act, 2008.
  • Entity registered under the Cooperative Society Act, 1912.
  • Whoever is entitled to become an insurance broker.

Requirement of Capital for registering as an Insurance Broker

The capital requirements to become an insurance broker are-

  • Rupees Seventy-five Lakhs for whoever is a direct broker and a net worth of a minimum of 50 lakhs.
  • Rupees Four Crores for a re-insurance broker and a net worth of a minimum of 2 Crores.
  • Rupees Five Crores for a composite broker and a net worth of a minimum of 2.5 Crores.

There are basic deposit requirements for registering as an Insurance Broker with the scheduled bank before getting the insurance broker license. These are

  • Rupees 10 lakhs in case of a direct broker to become an insurance broker, and
  • A minimum of ten per cent of the total capital requirement in the case of a composite broker or a re-insurance broker.

Qualification

For getting an insurance broker license, the applicant must have basic qualifications like –

  • At least two persons should be qualified and have the working knowledge to be an insurance broker.
  • Those persons must have the necessary certificates and skills to be an insurance broker.
  • The principal officer of the company must hold either a key managerial post, be a partner, or be a director of the company.

Physical space

One of the basic requirements for registering as an Insurance Broker is that the company should have the required infrastructure, proper spacing, IT infrastructure, and also some workforce that are trained properly to carry out the business activities.

Application Procedure to become an Insurance Broker

The applicant should make an application to the authorities to become an insurance broker. The procedure followed is as follows –

  • The application made must be in Form B Schedule I to become an insurance broker.
  • All the necessary papers should be mentioned in Form C Schedule I while applying.
  • Form D Schedule I of the regulations specifies the registration fee for the application. The fee for the direct broker is Rs. 25,000, for a re-insurance broker is Rs. 50,000, and for a composite broker, it is Rs. 75,000.
  • Apart from the application fee, there is a mandatory fee that needs to be paid. The fee for the direct broker is Rs. 50,000 for a new approval and Rs. 1,00,000 for its renewal (3 years), re-insurance is Rs. 1,50,000 for a new approval, and Rs. 3,00,000 for its renewal (3 years). Composite broker is Rs. 2,50,000 for a new approval and Rs. 5,00,000 for its renewal (3 years).
  • The fee can be paid online as well as through a demand draft in favour of the insurance regulatory department.
  • Any other documents can be asked to be submitted by the authority, and these documents need to be submitted by the applicant within 30 days of getting the notice to submit the documents.     

Issuance Procedure of Insurance Broker License

The applicant will get the approval and the certificate if all the rules, regulations, and procedures of the IRDAI are followed by the applicant on a timely basis. If any document is missing, then the authorities will send an intimation to the applicant, and he/ she needs to submit those documents within 30 days of such intimation by the authorities.

If the applicant fails to comply with the rules and regulations of the IRDAI or is not able to provide the required documents, then his/ her application can be rejected, and intimation should be provided to the applicant within 30 days of such rejection. The next application from the applicant to become an insurance broker can be filled after one year of such refusal.

Conclusion

To become an insurance broker, one needs to comply with all the requirements for registering as an Insurance Broker with the IRDAI. The insurance broker should be a skilled person with a good knowledge of the law and the process. Even after getting the license, the insurance agencies have to comply with the procedures of the IRDAI. There can be hefty penalties or even cancellation of the license in case of a breach of these procedures. The license also needs renewal from time to time through the authorities by filing the renewal form and paying the applicable fee.

Corpbiz can help you become an insurance broker and get a new license or a renewal of the old license with appropriate documentation on a timely basis. The process becomes smooth, and the chances of rejection are almost negligible since the services are provided by professionals who are skilled in the work.

Frequently Asked Questions

1. How can a broker get registered with IRDAI?

To get registered with the IRDAI, the broker has to go through the online portal to register, where a new username and password of that broker would be sent to the registered email ID by the system itself. The application can be sent through the website www.irdabap.org.in.

2. When can a broker apply for a new license in case the first one gets rejected?

In the case where the first application to get a broker license gets rejected by an applicant, he/ she can apply for a new license only after one year.

3. What is the relevance of Form F in the license application?

With the Form F Schedule I, the information and data of the principal officer is provided to the authorities.

4. Who can be denied to get an insurance broker license?

Any person or entity who is a non-resident, resident but living outside India, or any foreign partnership that is registered under the laws of that country cannot be issued with the insurance broker license in India.

5. Can an insurance broker carry out another business?

No, an insurance broker is not allowed to carry out another business apart from the ones that are mentioned in the articles of association and the memorandum of association.

6. Since when an application for renewal of the license is filed?

The application for renewal of the insurance broker license should be made to the authorities 30 days before the expiry of the license.

7. Which Form is used for the renewal of the license?

Form K Schedule I is used whenever there is a need to renew the insurance broker license.

8. Can a company get an insurance broker license?

Yes, the company can get an insurance broker license provided that the company is operating its business in an Indian territory and it is registered under the Companies Act, 2013.

9. What is the mandatory fee for the insurance brokers?

The fee for the direct broker is Rs. 50,000 for a new approval and Rs. 1,00,000 for its renewal (3 years), re-insurance is Rs. 1,50,000 for a new approval, and Rs. 3,00,000 for its renewal (3 years). Composite broker is Rs. 2,50,000 for a new approval and Rs. 5,00,000 for its renewal (3 years).

10. What is the total capital requirement for the insurance brokers?

The capital requirements for an insurance broker License are-
• Rupees Seventy-five Lakhs for whoever is a direct broker and a net worth of a minimum of 50 lakhs.
• Rupees Four Crores for a re-insurance broker and a net worth of a minimum of 2 Crores.
• Rupees Five Crores for a composite broker and a net worth of a minimum of 2.5 Crores.

Read Our Article: Key Benefits Of An Insurance Broker License

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