Insurance Broker License

The Insurance broker requires registration issued by the Insurance Regulatory and Development Authority (IRDA). In 2018, an updated version of the IRDA Regulations was issued by the IRDA according to which the Insurance Broker Registration could be done in the following ways.

Capital Requirement for Insurance Broker License 

• Direct Broker (Life, General or Life + General) - Rs. 75 Lakhs;
• Composite Broker – Rs. 5 Crores; 
• Reinsurance Broker - Rs. 4 Crores;

What is Insurance Broker?

An insurance broker is a company or a person registered as an adviser of insurance or qualified people or firm which acts through its partners or directors or employees with expert knowledge of insurance-based laws. The Insurance brokers guide people for their insurance requirements. Furthermore, they provide professional services to their customers and act as a mediator between a person and an insurance company seeking to purchase an insurance policy.

• The below-mentioned people or entities could be applicants for insurance broker license in India:
• A company registered under the Companies Act, 2013 or 1956;
• A registered co-operative society must be created under the Co-operative Societies Act, 1912 or any other similar law;
• An LLP must be registered under the Limited Liability Partnership Act, 2008;
• Any other person recognized by the Authority.
• Note: If the applicant is a registered LLP, then none of the below mentioned can be a partner for the same;
• Any individual residing outside India;
• Foreign LLP enrolled under Foreign Country Laws;
• Non-resident entity.

CAPITAL & FEES REQUIREMENT: 

Financial requirements for Insurance Broker License

The minimum financial requirements for the Insurance Broker Registration are as follows:

• 75 lakhs - direct broker;
• 4 crores - reinsurance broker; and
• 5 crores - composite broker.

Net worth Requirement                                       

• While the course of registration, the insurance broker is required to maintain a minimum net worth of:
• 50 Lakh for Direct Broker, and
• Fifty percent of the minimum capital requirement for composite and reinsurance Broker.

Net worth" means the aggregate value of the paid-up share capital and all reserves created out of the profits securities premium account and debit or credit balance of profit and loss account after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation; 

Deposit Requirements 

Applicant as per their category required to place the deposit in schedule Bank 

Direct Broker INR 10 Lakh

Reinsurance and Composite Broker – 10% of Minimum Capital in Fixed Deposit which shall not be released to them without prior written permission of authority.

Non Refundable Application Fees

• 25k - direct broker;
• 50k - reinsurance broker; and
• 75k - composite broker.

Registration Fees

• 50k - direct broker;
• 150k - reinsurance broker; and
• 250k - composite broker.

Validity of License

• Three years

Renewal Fees

• 100k - direct broker;
• 300k - reinsurance broker; and
• 500k - composite broker.

• It is vital that the following criterion is satisfied for obtaining Insurance Broker Registration:
• Whether the unit contains the word Broking or Broker in its name;
• The MOA should contain the insurance broking as its main motive;
• The company satisfies the minimum capital requirement as provided in the regulations;
• It should not hold any foreign capital which exceeds twenty-six percent of the total paid-up capital;
• The principal officer should hold a fair qualification, should have passed the brokers’ exam, and possess the essential training;
• The company must hold a minimum of two-person with the obligatory qualification and training;
• The company has the required infrastructure and  a team of a well-trained workforce to run the business of insurance broking;
• The people involved in securing the insurance business must be qualified and trained.

List of essential documents for obtaining an Insurance Broker License

The applicant will be needed to present the application along with the important documents and information as Form C of Schedule I of the IRDA (Insurance Broker) Regulations, 2018 specifies in the application Form FORM B. The necessary documents are as follows:

• The Insurance Broker License application, along with the necessary information, needs to be submitted in Form B;
• A copy of the MOA and AOA of the applicant company;
• The applicant shall be required to present the information regarding the Principal Officer, and also mention whether they fulfill the fit and proper criteria in Form G of Schedule I. Furthermore, he or she must make sure that they have fulfilled the training compliances before submitting the application;
• A written declaration of the Principle Officer affirming that they along with the directors or partners and other necessary managerial personnel don’t suffer from any disqualifications as mentioned in Section 42D of the Act;
• Absolute details of all the promoters, directors or partners, and other main managerial personnel;
• List of two minimum qualified brokers along with their qualifications;
• Statutory Auditor and Banker Details to be provided;
• For the process of registration, the applicant must have the required infrastructure. Therefore, the unit needs to submit the details of infrastructure along with the application which shall include equipment, IT infra, office space, and the workforce.
• List of all the current as well as the proposed shareholders of the applicant company;
• If the shareholder is the company, furnish the Board Resolution passed by them in investing in and promoting the applicant company;
• The audited/unaudited financial statement of  the company in addition to Certificate on Net Worth;
• Projected Business Plan at least for 3 years
• Organization Chart with accountability and responsibility of Department Head 

• Step 1: Submit the application in Form B

The application for broker License shall be needed to be submitted in Form B as provided in Schedule I of the IRDA laws

• Step 2: The involved authority can examine the application

If just in case the authority raises any question when the verification of the application for the IB License, it will demand the soul for added documents and data. Moreover, it will order the soul to befits any necessities.

• Step 3: The Submission of further documents just in case of queries

If the authority needs to any extent further documents, then it's to be submitted to them at intervals thirty days from the date of such communication.

• Step 4: In-principle approval for Broker License

Firstly, the authority can bear a radical investigation of the application. If everything is valid and actual, it will, then, issue in-principle approval for the Broker license.

• Step 5: The add on formalities when the supplying of in-principle approval

Once the in-principle approval is non-inheritable, one shall be needed to befit the additional necessities and submit the license fees with the Authority on-line.

• Step 6: supplying of Registration in kind

If the authority is convinced with all the wants prescribed within the regulation and also the in-principle certificate, then a Certificate of Registration in-kind J per Schedule1 shall be issued.