Insurance Broker License is a basic requirement for a company or an individual who wants to act as a mediator between the clients who want to buy the insurance and the insurance companies. India's insurance brokers are governed by the Insurance Regulatory and Development Authority of India (IRDAI).
Overview of Insurance Broker License
There is a wide range of insurance policies offered by various insurance companies in today's world, which increases confusion among the clients that which insurance policy is best for them. That is where the insurance broker becomes important as an insurance broker explains and suggests the benefits and drawbacks of the clients' insurance policies, which makes it easier for the clients to choose the best policy. In other words, an insurance broker acts as a middleman between the clients and the insurance company.
Insurance Broker License is a basic requirement for a company or an individual who wants to act as a mediator between the clients who want to buy the insurance and the insurance companies. India's insurance brokers are governed by the Insurance Regulatory and Development Authority of India (IRDAI).
Different types of Insurance Brokers
The following are the different kinds of insurance brokers.
Minimum capital required for obtaining Insurance Broker License
An applicant requires the following minimum capital for applying for insurance broker registration:
INR 75 lakh for Direct Broker
INR 4 crore for Reinsurance Registration
INR 5 crore for Composite Broker
Net worth Requirement
During the registration process of an insurance broker license, the broker must maintain a minimum net worth of
INR 50 lakh for Direct Broker
For Composite and reinsurance broker- 50% of the minimum capital requirement
Deposit Requirement
The applicant must deposit a certain amount to a scheduled bank. The applicant has to ensure that the amount is deposited before applying the registration application and during the course insurance broker license.
INR 10 lakh for Direct Broker
Composite and Reinsurance Broker- 10% of the minimum capital requirement
Functions of Insurance Broker License
Functions of a Re-Insurance Broker
A reinsurance broker gets to familiarize with the nature of the clients business and makes a risk retention strategy;
A reinsurance broker maintains healthy and clear records of the insurer’s business;
A reinsurance broker give advice on the matter regarding insurance covers and different types of insurance covers available in the reinsurance markets and international insurance;
A reinsurance broker creates a database of available reinsurance markets which also covers the solvency ratings of an individual reinsurer;
A reinsurance broker protects reinsurance by providing risk management services;
A reinsurance broker proposes a reinsurer or a group of reinsurer;
A reinsurer negotiates on behalf of the client with a reinsurer;
Functions of a Direct Broker
A direct broker acquires complete information regarding business and risk management policy for the client.
A direct broker gets familiar with the nature of the client's business and underwriting information that will help explain things regarding business to the insurer and other individuals.
A direct broker gives suggestions regarding suitable insurance covers and terms.
A direct broker has complete knowledge regarding available insurances in the market.
A direct broker provides a quotation about the contemplation of the client.
Functions of a composite Broker
A composite broker performs all the functions of both a reinsurance broker and a direct broker.
What are the necessary documents for Insurance Broker License?
To obtain a broker's license, an applicant broker has to submit necessary documents and information. The following are the important documents that are required to be submitted along with the information prescribed on Form C of Schedule I of the Insurance Regulatory and Development Authority (IRDA) Regulations of 2018.
Form B is necessary for the application of a broker's license.
A certified copy of the Memorandum of Association (MoA)
A certified copy of Articles of Association (AoA)
In Form G of Schedule I, the identification with the principle officer and whether it carries out the legitimate and fit criteria must be introduced. Furthermore, an applicant has to ensure that all the preparing compliances are fulfilled before the application is submitted.
A composed assertion with the authorized official expressing that they, alongside accomplices/directors and another essential admin workforce, are not having any exclusions mentioned in section 42 D of the Act.
Complete subtleties of accomplices/directors, advertisers, and other key admin staff.
A detailed list of at least two agents who are qualified along with their capabilities.
Detailed information regarding Bank accounts.
Subtleties of bankers alongside statutory advisers.
Registration Procedure of Insurance Broker License
In Form B of Schedule I, an applicant has to properly fill the application for a broker's license. Along with Form B's application, the candidate also has to submit the necessary documents and the prescribed registration fee.
After examining the application, if the authorities have some doubts regarding the application, documents, or about the provided information, the authorities can approach the applicant for clarification and, if required, direct the applicant to consent any necessities.
The applicant has to within 30 days provide the explanation, information, or documents whatever the case may be.
If the applicant satisfies all the mentioned conditions, then the concerned authority will issue an in-principle approval for insurance broker registration.
After the issuance of basic approval, the applicant has to give consent to the extra necessities and submit the required fee for an insurance broker license on the official online portal.
If the applicant has fulfilled all the mandatory prerequisites stated in the Act, Rules, Guidelines, fliers, etc., the authorities will issue a registration certificate in Form J mentioned in plan 1.
Conclusion
Insurance Broker License is granted to a qualified and expert firm or individual acting through its workers or partners or directors with knowledge on insurance-related laws as profundity information on insurance items. An insurance broker offers skilful assistance to the customers and acts as a mediator between an individual who is buying or searching for an insurance policy and the insurance agency.