Functions of a direct broker — The functions of a direct broker shall include the following:
Obtaining detailed information of the client’s business and risk management philosophy;
Familiarizing himself with the client’s business and underwriting information so that this can be explained to an insurer and others;
Rendering advice on appropriate insurance cover and terms;
Maintaining detailed knowledge of available insurance markets, as may be applicable;
Submitting quotation received from insurer/s for consideration of a client;
Providing requisite underwriting information as required by an insurer in assessing the risk to decide pricing terms and conditions for cover;
Acting promptly on instructions from a client and providing him written acknowledgements and progress reports;
Assisting clients in paying premium under section 64VB of Insurance Act, 1938 (4 of 1938);
Assisting in the negotiation of the claims;
Maintaining proper records of claims;
Assisting in opening of e-insurance accounts;
Assisting in issuing e-insurance policies; and
Any other function which the Authority may specify.
Functions of a re-insurance broker – The functions of a re-insurance broker shall include the following:
Familiarizing himself with the client’s business and risk retention philosophy;
Maintaining clear records of the insurer’s business to assist the reinsurer(s) or others;
Rendering advice based on technical data on the reinsurance covers available in the international insurance and the reinsurance markets;
Maintaining a database of available reinsurance markets, including solvency ratings of individual reinsurers;
Rendering risk management services for reinsurance;
Selecting and recommending a reinsurer or a group of reinsurers;
Negotiating with a reinsurer on the client’s behalf;
Assisting in case of commutation of reinsurance contracts placed by them;
Acting promptly on instructions from a client and providing it written acknowledgements and progress reports;
Collecting and remitting premiums and claims/refunds within such time as agreed upon;
Assisting in the negotiation and settlement of claims;
Maintaining proper records of claims;
Exercising due care and diligence at the time of selection of reinsurers and international insurance brokers having regard to their respective security rating and establishing respective responsibilities at the time of engaging their services;
Creation of market capacity and facility for new, stressed, emerging and existing business and asset class for and from both direct insurers and reinsurers;
Render preliminary loss advice (PLA) within reasonable time;
Given the nature of business, separate norms need to be followed for Inward and Outward business
Inward business
Broker to have adequate specific knowledge of the country whose business is being offered like: political stability, economic position, local regulations, tax laws, etc.
Introduce new business/ products depending on the reinsurers business plan and risk appetite
Outward business
Rating and market credibility of the reinsurer
To ensure prompt collection and remittance of funds, follow up for funds to be initiated sufficiently before the due dates for settlement from cedant to reinsurer and from reinsurer to cedant as relevant;
To comply with the laws and other requirements of the local jurisdiction while arranging insurance/ reinsurance for clients/ insurance companies based outside India; and
Any other function which the Authority may specify.
Functions of composite broker-
A composite broker shall carry out the functions mentioned in clause 1 and 2 above.
In case a composite broker is appointed by a client to act as direct insurance broker he shall not influence the insurer concerned to appoint him as reinsurance broker for arranging reinsurance on the same contract. However, after following a due and transparent process if the insurer appoints the composite broker as a reinsurance broker for arranging reinsurance on the same risk on which the composite broker acted as a direct broker, the composite broker shall ensure that there are proper systems and controls in place to see that the interests of the client and the insurer are not prejudiced.
