Insurance Broker License

The Insurance Regulatory and Development Authority Act, 1999 with the Authority in consultation with the Insurance Advisory Committee, makes the regulations for Insurance Broker License. The objective of these Regulations is to monitor and supervise insurance brokers. The insurance broker advises people on their

insurance need and helps choose the right product. The broker acts as a middleman between the insurance company and people looking for purchasing policies.

Types of Insurance Brokers

Direct Insurance broker - A direct insurance broker is responsible for the solicitation and procurement of the business and allows the client to buy a policy from the website. He/She earns a commission from the company whose policy has been sold.
Composite insurance broker - A composite insurance broker is an agency who has a valid license to offer insurance-related services for life insurance and general insurance. The licensing process of a composite broker is selective by the authority.
Reinsurance broker- A reinsurance broker is someone who has the power to buy reinsurance on behalf of an insurance company.

Insurance Broker License

The Insurance Regulatory and Development Authority regulates the Insurance Broker License. According to the regulations, below mentioned capital amount is required for a license.

Direct Insurance Broker License - Rs.75 lakhs
Composite Insurance Broker License - Rs.5 crore
ReInsurance Broker License - Rs.4 crore

Eligibility to Apply for License

Any registered 1 formed under provisions of Co-operative Societies Act, 1912, or any similar law
Any company registered under the Companies Act, 2013
Any Limited Liability Partnership registered under the LLP Act, 2008
Any other individual recognised by the Authority

Net Worth Requirement

During the time of registration and in the course of Insurance Broker License, the broker should have a minimum net worth of Rs.50 lakhs for direct broker license and 50% of the minimum capital requirement for a composite broker and reinsurance licenses.

Deposit Requirement

Before the application and during the course of Insurance Broker License, the applicant will be required to deposit an amount of Rs.10 lakhs for Direct Broker and 10% of the minimum capital requirement for a composite broker and reinsurance broker with a scheduled bank.

Insurance Broker License Fee

The application will have to be submitted with the requisite fees specified below:

Non-Refundable Application Fees

Direct Broker – Rs.25,000
Reinsurance Broker – Rs.50,000
Composite Broker – Rs.75,000

Registration Fees for Fresh Registration

Direct Broker – Rs.50,000
Reinsurance Broker – Rs.1.5 lakhs
Composite Broker – Rs.2.5 lakhs

Renewal Fees for a period of 3 years

Direct Broker – Rs.1 lakh
Reinsurance Broker – Rs.3 lakhs
Composite Broker – Rs.5 lakhs

Documents Required

The application will have to be submitted in Form-B
Information related to Principal officer and if they ratify the criteria should be presented in Form-G.The training compliances need to be fulfilled before the application is submitted.
Proof of payment of fees.
A copy of the memorandum of association and articles of association. The objects stated in the incorporation documentation should be as per the regulations and activities are taken by an insurance broker.
Bank account details
A written declaration from the Principal officer stating that no directors, partners or key managerial personnel are suffering from any disqualifications stated in Section 42D of the Act.
Details about the partners, directors, managerial personnel and promoters.
Details of Principal Bankers with statutory auditors.
List of a minimum of two qualified brokers and their qualifications.
The applicant needs to have the requisite infrastructure and the details need to be submitted with the application. Infrastructure includes IT infrastructure, office space, manpower and equipment.
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IT returns of the last three years of shareholders with their net worth certificates and an affidavit regarding the source of invested funds.

Procedure to Apply for Insurance Broker License

Step 1: Submit a duly filed Insurance Broker License application in Form-B. Step 2: Once the documents are scrutinised, the authority will ask any queries or will ask for more information if need be. Step 3: After 30 days from the date of this communication, the applicant will be required to submit the necessary information or documents as the case may be. After being satisfied that the applicant fulfils all the conditions, the Authority will issue an in-principle approval for the registration. Step 4: Once the in-principle approval is issued, the applicant has to comply with additional requirements and submit the license fees with authority. Step 5: When the authority is satisfied with the requirements, regulations, rules and guidelines, then it will issue a Certificate of Registration in Form-J.

Validity of the License

The Certificate of Registration is issued for a duration of three years. The registered broker needs to submit an application for renewal of the license one month before the expiry of the three years. The regulations, along with application forms and other details, can be accessed here:

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Frequently Asked Questions

Common questions about Insurance Broker Licence.

The Insurance Broker License is issued by the Insurance Regulatory and Development Authority (IRDA) to regulate and monitor the activities of insurance brokers. The license ensures that brokers adhere to certain standards and requirements, protecting the interests of both insurance companies and policyholders.

The article mentions three types of Insurance Brokers: Direct Insurance Broker, Composite Insurance Broker, and Reinsurance Broker. Each type has different responsibilities and capital requirements for obtaining the license.

According to the article, eligible entities for an Insurance Broker License include registered co-operative societies, companies registered under the Companies Act, 2013, Limited Liability Partnerships (LLPs) under the LLP Act, 2008, and other individuals recognized by the IRDA.

The minimum net worth requirement during registration and the course of the Insurance Broker License is Rs. 50 lakhs for a direct broker license and 50% of the minimum capital requirement for composite and reinsurance broker licenses.

Before applying and during the course of the Insurance Broker License, the applicant must deposit an amount of Rs. 10 lakhs for a Direct Broker and 10% of the minimum capital requirement for composite and reinsurance brokers with a scheduled bank.

The article outlines various fees, including non-refundable application fees, registration fees for fresh registration, and renewal fees for a period of three years. The fees vary depending on the type of broker license.

Some of the essential documents required include Form-B (application form), Form-G (information about the Principal officer), proof of payment of fees, memorandum of association and articles of association, bank account details, audited balance sheets, and IT returns of the last three years.

The Certificate of Registration for an Insurance Broker License is issued for a duration of three years. The registered broker must apply for renewal one month before the expiry of the three-year period.

A Composite Insurance Broker is an agency that holds a valid license to offer insurance-related services for both life insurance and general insurance. The licensing process for a composite broker is selective and regulated by the IRDA.

The procedure involves submitting a duly filled application in Form-B, addressing queries from the IRDA, obtaining an in-principle approval, complying with additional requirements, submitting license fees, and finally receiving the Certificate of Registration in Form-J from the IRDA.