An Insurance Broker is a business entity that has personnel that possess ample of knowledge about insurance policies. These experts leverage that knowledge to act as an intermediary between insurers (insurance companies) and customers.
To become an insurance broker, you must obtain a Certificate of Registration from Insurance Regulatory Development Authority of India, also known as the Insurance Broker License.
In this article, we will open your eyes to the following factors of Insurance Broker License;
- The types of insurance brokers that are there
- The eligibility criteria of to become an insurance broker
- The procedure and documents required to file the application
What are the different types of insurance brokers in India
Insurance brokers or insurance intermediaries are of three types:
- Direct Insurance Brokers
- Reinsurance brokers
- Composite Insurance Brokers
Direct Insurance Brokers: Direct insurance brokers are direct insurance intermediaries – acting as a bridge insurance companies and customers. They leverage their knowledge about insurance policies to help the customers make the right choice while keeping in mind the needs of the insurance companies as well.
Reinsurance Brokers: Reinsurance companies (reinsurers) are business entities that provide reinsurance – insurance risk management services – to insurance companies. Reinsurance brokers act as intermediaries between insurers and reinsurers.
Composite Insurance Brokers: There are insurance companies that host the technological prowess and expertise to provide both insurance and reinsurance broker services. Such intermediary companies come under the category of composite insurance brokers.
What is the eligibility criteria to become an insurance broker
The common eligibility criteria to become an insurance broker is as follows:
- The applicant of the insurance broker license should either be a company, a trust, a society or an organization that has been given authorization by the Indian court to act as an insurance intermediary.
- The higher management of the applicant’s organization – society/ trust/ company – must have the right qualifications, including basic and insurance education.
Other than the above two, there are financial requirements that are separate for direct, reinsurance and composite brokers. These requirements are divided into three parts:
- Minimum capital requirement: The minimum capital that should be invested into the insurance broker organization from the very start.
- Net worth requirement: The net worth requirement that has to be maintained by the insurance broker organizations throughout their lifetime.
- Deposit Requirement: The deposit that insurance brokers have to make at the time of filing the application of insurance broker license.
Minimum capital requirements of insurance brokers:
- Direct brokers must meet the minimum capital requirement of INR 75 Lakh
- Reinsurance Brokers must meet the minimum capital requirement of INR 4 Crore
- Composite Brokers must meet the minimum capital requirement of INR 5 Crore.
Net worth requirement
- Direct Brokers must maintain their minimum net worth at INR 50 Lakh
- Reinsurance Brokers must maintain their minimum net worth at least at 50% of the minimum capital or INR 2 Crore, whichever one is higher.
- Composite Brokers must maintain their minimum net worth at least at 50% of the minimum capital or INR 2.5 Crore, whichever one is higher.
- Direct Brokers have to deposit INR 10 Lakh at the time of application filing
- Reinsurance and Composite brokers have to deposit 10% of their minimum capital at the time of application filing.
Procedure to obtain the Insurance Broker License
Following are the steps that each type of insurance broker haven to follow to obtain Insurance Broker License:
- Get the qualification prescribed as per the IRDA regulations for an Insurance Broker
- File application FORM B – the insurance broker certificate of registration application form
- Submit the required documents
- If the IRDA accepts your application after assessing it and your documents, you’ll obtain the certificate of Registration.
Read More Licenses: Insurance Self Network Platform
Documents required for the application for Insurance Broker License
- Certificate of incorporation
- Memorandum of Association
- Articles of Association
- In case the applicant is a society or another authorized organization, provide the relevant identification documents.
- Details of the principle officer – the one responsible for running the insurance broker operations
- Duly filled declaration by the principle officer stating that he has met all the qualification requirements to become an insurance broker.
- List of two insurance agents with the requisite insurance broker qualification
- Bank account details of the applicant company.
- Details of Principle bankers
- Copy of Board Resolution
- Company’s balance sheet.
As an Insurance broker license aspirant, you should not only meet the qualification requirements, but also the requisites in terms of finances.
Only then, you can follow the steps correctly – prompting the IRDA to take your application seriously. For further details, contact Registrationwala.
In this blog, you shall know about how to obtain insurance broker license in India. Dive deep and find out about the intricacies of insurance broker license.
For further details contact Registrationwala.