Eligibility Criteria :
The Government has prescribed minimum requirements for securing an Insurance broker license as mentioned below. Apart from this, the broker has to ensure to get registered with the IRDAI where in applicant is required to register in the portal and username and password would be generated by the system and sent to the user in the registered email id. Subsequently, an application can be submitted online by accessing the website www.irdabap.org.in The application for new broker’s registration shall be accepted only through on-line mode.
Corporate Structure
The following can be registered under the Insurance Broker License:
- Company that is established under the Companies Act 2013 or the previous Company Law 1956;
- A partnership that is registered under the Limited Liability Partnership Act, 2008;
- A cooperative society which is registered under the Co-operative society act 1912; and
- Any other individual or company that is allowed to conduct the business related to an Insurance Broker.
Capital Requirements
The applicant must satisfy the capital requirements for applying for a Broker’s License:
- Direct Broker- 75 Lakhs.
- Re-insurance Broker- 4 Crore.
- Composite Broker-5 Crore.
Net Worth Requirements
Explanation: For the purposes of these regulations, “net worth” shall have the meaning assigned to it in the Companies Act 2013 and as amended from to time
50 Lakhs/200 Lakhs/250 Lakhs for Direct/Reinsurance/Composite Brokers
- The net-worth of an Insurance Broker shall at no time during the period of certificate of registration fall below:
- rupees fifty lakh for direct broker;
- 50% of the minimum capital requirements or contribution or equivalent specified under Regulation 19(1) for reinsurance / composite broker.
- In case of non-compliance of sub-regulation (1) above, the Insurance Broker shall immediately restore the net worth to the limits given in (1) above and report compliance of the same.
- The Insurance Broker shall submit to the Authority a net worth certificate duly certified by an Auditor every half-year.; Net worth requirement after Registration
Deposit Requirements
Every insurer (applicant) before the commencement of the insurance broker business must ensure that the deposit has been maintained with the scheduled bank. The sum which has to be deposited is as follows:
- 10 Lakh Rupees for a Direct Broker; and
- 10% of the minimum capital/ contribution is required for re-insurance / composite broker. Fixed deposit shall not be released to them without the prior written permission of the Authority.
Office Space/ Facilities
- The applicant applying for an Insurance Broker License must also satisfy necessary infrastructure such as adequate office space, equipment, trained manpower, and IT infrastructure to effectively discharge its activities.
Qualification
- The applicant must ensure that at least two qualified persons are present who have the necessary training to function as insurance brokers. This is required to conduct the business of the insurance broker. If the applicant is carrying out insurance broker business related to life insurance and general insurance, then the applicant has to make sure that the two qualified individuals have relevant and necessary qualifications in both life and general insurance.
- The principal officer of the business must also have requisite qualifications. He must possess the necessary certificate and skills for carrying out the insurance broker business.
- Principal Officer must be a key management executive of the company, whole-time director, partner, or office, which requisite experience.
Purpose of the Business
- The applicant should ensure that the main objects of the business is insurance brokering. These must be mentioned in the objects clause of the Articles of Association (AOA) and the Memorandum of Association (MOA).
- Foreign investors are also allowed to invest in an insurance brokers business.
Professional indemnity insurance
- Every insurance broker shall take out and maintain at all times a professional indemnity insurance cover throughout the validity of the period of the Certificate of Registration issued to them by the Authority, as specified in Schedule II – Form S of the IRDAI (Insurance Brokers) regulations.
Provided that the Authority shall in appropriate cases allow a newly registered insurance broker to produce such a policy within twelve months from the date of issue of certificate of registration..
