Insurance Broking

1. INSURANCE BROKING
INDIAN MARKET - 2020

2. What is
Insurance
Broker?
 An Insurance broker has professionally qualified people or firm
acting thru its directors or Partners or employees with expert
knowledge of insurance-related laws as depth knowledge of
insurance products.They advise people on their insurance need.
An insurance broker provides professional services to its client and
working as middlemen between an insurance company and a
person who is looking for purchasing an insurance policy.

3. Classification
of Insurance
Brokers
 A. Direct Insurance Broker – solicitation and procurement of the
business of insurance andAllows its client to buy an insurance
policy from its website or Computer software and earns
commission from the insurance company whose policy has been
sold.You can have a detailed view of the function of Direct
insurance broker
 B. Composite Insurance Broker – is an insurance agent and hold
valid license to offer insurance related services for both lives as
well as general insurance. Composite insurance broker licensing
process is very selective by the authority.
 C. Reinsurance Broker – A company who has the Power to bind
reinsurance on the behalf of an insurance company

4. What is
Insurance
Broker
License?
 In India Insurance Broker License as well as their operations is
regulated by regulations issued by the Insurance Regulatory and
Development Authority (IRDAI). In 2018, an updated version of
IRDAI (Insurance Broker) Regulations, 2018 were issued by the
IRDAI.As per these regulations Insurance Broker License can be
done in any of the following categories:
 Direct Insurance Broker License – Capital required Rs 75 Lac
 Composite Insurance Broker License – Capital required Rs 5 Cr
 Reinsurance broker License – Capital required 4 Cr

5. Who can be
anApplicant
for Insurance
Broker
License?
Following people can be an applicant for Insurance Broker License in
India;
 Any company registered under the CompaniesAct, 2013 or any
previous variant.
 Any registered co-operative society formed as per the provisions
of Co-operative Societies Act, 1912 or any other similar law.
 Any LLP registered under Limited Liability PartnershipAct, 2008.
 Any other person recognized by the Authority
 Note: If the applicant of Insurance Broker License application is a
registered LLP then none of the following can be a partner of the
same;
 Non-resident entity.
 Foreign LLP registered under foreign country laws.
 Any person resident outside India.

6. Capital and
NetWorth
Requirement
 Minimum Financial Requirements for Insurance Broker License
 Paid-up Capital/Contribution Requirement
Following is the minimum capital requirement in order to apply for insurance broker
registration;
 For Direct Broker – Rs. 75 Lakh
 For Reinsurance Broker – Rs. 4 Crore
 For Composite Broker – Rs. 5 Crore
 Net worth Requirement
 At the time of registration and during the course of Insurance Broker License the
insurance broker is required to maintain minimum net worth of
 Rs. 50 Lakh for Direct Broker and
 50% of the Minimum Capital Requirement for reinsurance and composite Broker.
 Deposit Requirement
 Before filing the application for registration and during the course of Insurance
Broker License the applicant is required to deposit with the scheduled bank an
amount of;
 Rs. 10 Lakh for Direct Broker and
 10% of the Minimum Capital Requirement for reinsurance and composite Broker.
 Insurance Broker License fee
 Application for Insurance Broker Licenses shall is submitted along with the requisite
fees as specified in Schedule I – Form D of these regulations.

7. Registration
and Fees
 Non-RefundableApplication 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

8. 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

9. Documents
Required for
Insurance
Broker
License
 The application for Insurance Broker License is required to be submitted along with all the
required documents and information. Following is a list of such documents and information
specified in Form C of Schedule I of the IRDA (Insurance Broker) Regulations, 2018;
 Application for Insurance Broker License is submitted in Form B along with the information
required.
 Copy of MOA andAOA of the applicant.The main objects stated in such incorporation
document must be as per regulations and specify activities undertaken by an insurance broker.
 Information relating to Principal Officer and whether they satisfy the fit and proper criteria
must be presented in Form G of Schedule I. And make sure that required training compliances
are fulfilled before the application is submitted.
 A written declaration from the Principle officer stating that they along with directors/partners
and other key managerial personnel are not suffering from any disqualifications stated in
section 42 D of the Act.
 Complete details of directors/partners, promoters and other key managerial personnel.
 List of a minimum of two qualified brokers with their qualifications.This is important as they
will be responsible for all the soliciting and procuring insurance business after registration.
 Bank account details
 Details of Principal Bankers along with the statutory auditors
 For registration, the applicant is required to have requisite infrastructure. thus these details are
to be submitted with the application. Infrastructure will include office space, IT infrastructure,
equipment, and requisite qualified manpower.

10. Insurance
Broker
License
Procedure
 Finally, we will discuss the process of submission of an application for Insurance Broker
Registration. Following are the steps involved in the Insurance Broker License procedure;
 A duly filled Insurance Broker License application in Form B provided in Schedule I of the
regulations is to be submitted by the applicant with the authority along with the non-
refundable application fee and required documents.
 After scrutiny of the application for Insurance Broker License if the Authority has any queries it
can ask the applicant for information, document or can even direct them to comply with any
requirements.
 Within 30 days from the date of such communication the applicant is required to submit such
information, document or clarification as the case be.
 If after due consideration of the application for Insurance Broker License and being satisfied
that the applicant fulfills all the above-mentioned conditions then the Authority will issue an in-
principle approval for Insurance Broker Registration.
 After the issue of in-principle approval, the applicant is required to comply with the additional
requirements and submit Insurance Broker License fees with the Authority either online.
 If theAuthority is satisfied that all the requirements stated in the Act, regulations, Rules,
guidelines, circulars etc. are satisfied by the applicant along with the conditions stated in the
in-principle approval certificate, then it will issue a Certificate of Registration in Form J
prescribed in schedule 1
 Insurance broker LicenseValidity & Renewal
 Insurance broker Certificate of Registration issued for three years from the date of such
issuance.The registered insurance broker is required to submit an application for renewal of
Insurance Broker License at least one month before the expiry of these three years of
registration.

11. Latest
Insurance
Brokers
Regulations
Dated : 8th
April 2020

12. ThankYou
Jaswanth Singh G
Insurance (InsureTech) & Pensions Domain Consultant and Faculty
Innovator @ indiaassurance.in and allinsuranceclaims.in
+91 8310765785 +91 9449049107
jaswanth@indiaassurance.in