Cracking the Code: Your Comprehensive Guide to Acquiring an Insurance

Introduction

Starting an insurance broker business requires obtaining a Certificate of Registration from the Insurance Regulatory and Development Authority of India (IRDAI). This article provides an overview of the application process and conditions for granting the license.

Application Procedure

To apply for an Insurance Broker License, the applicant must follow these steps:

1. Type of Insurance Broker Business: The applicant should specify the type of insurance broker business they want to establish.
2. Submit the Application: The application for an Insurance Broker License must be made using FORM B, which is provided in Schedule I of the IRDAI(Insurance Brokers) regulations.
3. Required Documents: The application must be submitted along with the documents mentioned in FORM C, as specified in Schedule I of the IRDAI(Insurance Brokers) regulations.
4. Pay the Fees: Along with the application, the applicant must pay the prescribed fees as mentioned in FORM D of Schedule I. The fees vary depending on the type of broker business:Direct broker: Rs. 25,000Re-insurance broker: Rs. 50,000Composite broker: Rs. 75,000

There are also mandatory fees that need to be paid for registration requirements. The fees for direct brokers, re-insurance brokers, and composite brokers are Rs. 50,000, Rs. 1,50,000, and Rs. 2,50,000 respectively. In case of renewal of registration, the fees for direct brokers, re-insurance brokers, and composite brokers are Rs. 1,00,000, Rs. 3,00,000, and Rs. 5,00,000 respectively. The mandatory fees are valid for the duration of the certificate of registration.

1. Payment Method: The fees can be paid through electronic means or by a demand draft (DD) payable in favor of the Insurance Regulatory and Development Authority of India, Hyderabad.

Clarification/Further Information

The authority may request the applicant to provide further information if deemed necessary. The applicant must submit the requested documents within 30 days from receiving the intimation from the authority.

Procedure for Issuing Insurance Broker License

The procedure for issuing an Insurance Broker License is as follows:

1. In-Principal Approval: If the authority determines that all the requisite information complies with the insurance broker license requirements, an in-principal approval will be provided to the applicant. This approval is subject to the applicant meeting the requirements related to the certificate of registration.
2. Compliance with Laws and Regulations: The authority will grant the certificate of registration as an Insurance Broker License if the applicant has complied with all the relevant laws and regulations.
3. Code of Conduct: The applicant must satisfy the authority that they will adhere to the code of conduct associated with the insurance broker business.
4. Additional Registrations: Once the certificate of registration for the insurance broker license is issued, the broker can apply for any other registrations under the IRDAI.
5. Renewal of Registration: If there is a change in law or if the certificate of registration is canceled or repealed by the Securities Appellate Tribunal or any court of law, the applicant can make a new application after one year to the concerned authority.

Rejection

An application for an insurance broker license may be rejected if the authority finds that the applicant has not fulfilled the necessary requirements. The authority must communicate the refusal to grant the license within 30 days of rejection. After the rejection, the applicant can reapply after one year.

Conditions for Granting the Insurance Broker License

The IRDAI has established certain conditions that must be met before granting an insurance broker license:

1. Compliance with IRDAI Rules: The insurance broker must conduct their business according to the rules set by the IRDAI.
2. Integrity of Information: If the insurance broker business provides false or misleading information regarding the particulars of the business, it must notify the authority.
3. Timely Handling of Complaints: The insurance broker must address all customer complaints within 14 days of receiving them. The business should keep records of the number of complaints received.
4. Business Conduct: The insurance broker must reasonably conduct their business within the framework of the rules established by the IRDAI.
5. Bookkeeping: The insurance broker must maintain proper books of accounts.
6. Marketing Restrictions: Insurance brokers are prohibited from engaging in multi-level marketing or solicitation.

Documents Required for Insurance Broker License

The following documents must be submitted along with the application for an Insurance Broker License:

• Submission of relevant information as required in Schedule I - Form B.
• Copy of the Memorandum of Association and Articles of Association compliant with the requirements of the Companies Act 2013.
• Payment of the fee for the specific category of Insurance Broker License.
• Training details for the employees starting an insurance broker business.
• Schedule I - Form F with relevant data of the principal officer.
• Fit and Proper certification as per Schedule I - Form G.
• Declaration from key management executives, principal officers, and directors confirming their lack of disqualification under the Act.
• Details of Directors/Partners, Promoter, and Key Management Personnel in the provided form.
• Schedule I - Form F, including a list of qualified persons responsible for managing and procuring brokerage business and their qualifications.
• Details of statutory auditors and principal bankers, along with the bank account number of the applicant.
• Infrastructure details, including IT infrastructure, supported by evidence such as ownership or lease agreements demonstrating sufficient space for managing the brokering business.

Validity of Certificate of Registration for Insurance Brokers

A certificate granted by the IRDAI is valid for three years from the date of issue, subject to any orders issued by the authority. To engage in the insurance broker business, it is mandatory to possess a proper certificate and be registered with the authority.

Insurance Broker License Renewal

To renew an insurance broker license, the applicant must follow these steps:

1. Timely Application: Applications for renewal must be submitted to the relevant authority at least 30 days before the expiry of the license. The application must be submitted using FORM K of Schedule I of the regulations.
2. Late Application: If an application is made after the expiry but before the actual expiry, a late fee of Rs. 100/- must be paid along with the application.
3. Delayed Renewal: If the application for renewal of registration is made within 60 days of the expiry of the certificate, the applicant must pay a fee of Rs. 750/-. Any application made after this 60-day period will only be considered after one year, during which time the insurer must not engage in any business activities or solicit new customers.
4. Time Limit for Renewal: An #insurance broker cannot apply for renewal after 90 days from the expiry of the certificate. However, they are allowed to serve existing policyholders until their renewal application is processed.
5. Renewal Application: The application for the renewal of the insurance broker license is the same as a new application.
6. Rejection of Renewal: If the application for renewal is rejected, the applicant must be notified accordingly.

For more information, please refer to the Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2018, available at www.irdai.gov.in. or you can DM me for more details.