What are the categories of insurance broker?
There are five categories of insurance broker which are (i) Direct Broker (Life), (ii) Direct Broker (General), (iii) Direct Broker (Life & General), (iv) Reinsurance Broker and (v) Composite Broker.
Who is a Direct Broker?
Direct Broker means an insurance broker, registered by the Authority, who for a remuneration and/or a fee, solicit and arranges insurance business for its clients with insurers located in India and/or provides claim consultancy, Risk Management services or other similar services, permitted under IRDAI (Insurance Brokers) Regulations, 2018.
Who is a Reinsurance Broker?
Reinsurance Broker means an insurance broker, registered by the Authority, who for a remuneration and/or a fee, solicit and arranges re-insurance for its clients with insurers or reinsurers with reinsurers and/or insurers located in India and/or abroad; and/or provides claims consultancy, Risk Management services or other similar services, permitted under IRDAI (Insurance Brokers) Regulations, 2018.
Who is a Composite Broker?
Composite Broker means an insurance broker, registered by the Authority, who for a remuneration and/or a fee, solicits and arranges insurance and/or re-insurance for its clients with insurers and/or reinsurers located in India and/or abroad; and/or provides claims consultancy, Risk Management services or other similar services, permitted under IRDAI (Insurance Brokers) Regulations, 2018.
Who is the Principal Officer of an insurance or reinsurance broker?
The Principal Officer is an officer in an executive role designated as such for the purpose of performing the duties and responsibilities as specified in the regulations to carry out the functions of an insurance or reinsurance broker and who shall be the chief executive officer or a whole - time director or managing director, managing partner or a managing trustee or such individual appointed/engaged exclusively to carry out the functions of an insurance broker.
Who is the Broker Qualified Person of an insurance and reinsurance broker?
Broker Qualified Person is an individual who is an employee or director of the insurance and reinsurance broker engaged in solicitation and procurement of insurance business and who has undergone training and passed the examination specified for them.
Who is the Key Management Person of an insurance broker?
Key Management Person includes Chief Executive Officer, Chief Marketing Officer, Chief Finance Officer, Chief Technical Officer/Head-IT, Head-Reinsurance and Compliance Officer.
Who can be an Insurance Broker?
A company formed under the Companies Act, 2013 (18 of 2013); or a cooperative society registered under the Co-operative Societies Act, 1912 or under any law for the registration of co-operative societies; or a limited liability partnership formed under the Limited Liability Partnership Act, 2008 (6 of 2009) with no partner being a non-resident entity/person resident outside India as defined in clause(w) of section 2 of the Foreign Exchange Management Act, 1992 (42 of 1999) FEMA, and not being a foreign limited liability partnership registered there under.
Can an insurance broker carry another business in addition to insurance broking as defined in Regulations?
No, an insurance broker cannot carry any other business other than those permitted in the regulation.
What should be the nomenclature of the Insurance Broker?
The insurance brokers shall have the word “Insurance Broker” or “Insurance Brokers” or “Insurance Broking” in the name of the Insurance Broker.
What is the need to use the word “Insurance Broker” or “Insurance Brokers” or “Insurance Broking” in the name of the Insurance Broker?
The words would reflect their line of activity and enable the public to differentiate insurance brokers registered with Insurance Regulatory and Development Authority of India (IRDAI) from other non-registered insurance related entities.
What is the need to obtain “No Objection Certificate” from the Authority?
It is the requirement of Registrar of Company (RoC) that the use of word “Insurance Broker” or “Insurance Brokers”, or “Insurance Broking” in the nomenclature of the proposed company requires “No Objection Certificate” from the respective regulator.
How can we get “No Objection Certificate” for incorporation of a new company or change the name of existing company?
The applicant has to submit as follows for seeking No Objection Certificate
Covering letter in which it should be mentioned the purpose of letter.
Copy of availability of name of proposed broking company filed with RoC
Copies of Identity proof and address proof of proposed shareholders/directors of the proposed company.
What is the validity period of “No Objection Certificate”?
The “No Objection Certificate” certificate will be valid for six months from the date of issuance of the certificate.
Who can be a Principal Officer of the insurance broker?
Principal Officer of an insurance broker can be a person who possesses the educational qualifications as stipulated in Schedule – I Form E of the Regulations, undergo training and pass the examination conducted by National Insurance Academy, Pune with 50 per cent marks.
What is the capital requirement for Direct Broker/Reinsurance Broker/ Composite Broker?
The capital requirement for Direct Broker/Reinsurance Broker/Composite Broker is Rs.75 Lakhs/Rs.4 Crores/Rs.5 Crores respectively..
What should be the net worth for Direct Broker/Reinsurance Broker/Composite Broker?
The broker should maintain the net worth for the Direct Broker/Reinsurance Broker/ Composite Broker of Rs.50 lakhs/Rs.200 lakhs/Rs.250 lakhs at any point of time after getting registration.
How Net worth of a broking company is calculated?
The definition of net worth as defined in the Companies Act, 2013 is to be followed.
What is the maximum permissible limit for the foreign direct investment (FDI)?
It is 49 per cent of the total paid up capital of the broking entity.
How to apply for seeking Direct Broker/Reinsurance Broker/Composite Broker certificate of registration from the Authority?
In order to apply for registration of new Direct Broker/Reinsurance Broker/Composite Broker, an applicant is required to register in the portal and user name and password would be generated by the system and sent to the user in the registered e-mail id. Subsequently, an application can be submitted online by accessing the website: http://www.irdabap.org.in. The application for new broker’s registration shall be accepted only through on-line mode. Step-by-step procedure for the registration of new broker has been explained in user manual, which is enclosed at http://www.irda.gov.in.
Where can we get user manual?
User manual is available at http://www.irdabap.org.in or http://www.irda.gov.in.
How can we get user manual?
It can be obtained either way.
User manual may be obtained at http:// www.irda.gov.in as under:
Please see the icon “other links” in which click on icon “online system for brokers registration and returns filing”.
User manual may be obtained at http://www.irdabap.org.in as under:
Click on “Brokers” in the landing page, further, click on “Help for License Submission”.
How many sub user ID can be created under master ID?
Three sub user IDs can be created under master ID in which two sub IDs will be used by the Directors and one ID will be created for one of the employees of an applicant.
Who should do digital signature in the application form?
Two directors should do digital signature in the application form
How to upload digital signature in the application form?
Step-by-step process to upload digital signature in the application form is mentioned in the user Manual.
what is the application fee for direct broker/reinsurance broker/composite broker and whether it can be paid through online.
The application fee for direct broker/reinsurance broker/composite broker is Rs.25,000/Rs.50,000/Rs.75,000. The fee can be paid through online.
What are the documents needed to submit along-with new application form for direct/reinsurance/composite broker certificate of registration?
The details are under:
- Copy of Memorandum of Association (MoA) or Article of Association (AoA)
- If the applicant is applied for direct broker, the main object of the applicant is “To act as a Direct Broker under the IRDA (Insurance Brokers) Regulations, 2018 as amended from time to time”.
- If the applicant is applied for reinsurance broker, the main object of the applicant is “To act as a Reinsurance Broker under the IRDA (Insurance Brokers) Regulations, 2018 as amended from time to time”.
- If the applicant is applied for composite broker, the main object of the applicant is “To act as a Composite Broker under the IRDA (Insurance Brokers) Regulations, 2018 as amended from time to time”.
- The AoA of the entity should not provide for (1) issuance of shares of any type other than equity and/or with differential voting rights & (2) allotment of shares in a consideration other than cash. In case, the AoA of an entity provide for any of the above it is advised to kindly amend it suitably.
- The Paid - up - Capital of the entity should be minimum Rs.75 lakhs, 400 lakhs and 500 lakhs for direct, reinsurance and composite broker respectively.
- Copy of shareholders agreement, if any.
- If the applicant entity is a Private Limited Company, a certificate issued by the Chartered Accountant on the overall shareholding structure of applicant entity certifying the names of shareholders, date/s of allotments of shares made to each of them, date-wise nos. of shares allotted, total nos. of shares held by each of the shareholders, its percentage in the total shareholding of the entity, share certificate nos. & folio nos. along with the authorized and paid up capital of the applicant entity
- If the applicant entity is a Limited Liability Partnership, a certificate issued by the chartered accountant on the overall partnership structure of the applicant entity certifying the names of partners, percentage of contribution in the total partnership of the entity along with the authorized and paid up capital of the applicant entity.
- If the promoter is a company, copy of Board Resolution permitting company to invest in the applicant entity, last three years annual reports and net worth certificate of the promoting company.
- If the shareholder is individual, copy of last three years Income Tax Returns and its computation and the net worth certificate just prior to making investment in the applicant entity with its computation which should be issued by a Chartered Accountant.
- A self declaration in respect of promoters/shareholders/partners that the funds being invested as equity capital are out of their own earnings or savings and not out of borrowings.
- Form F & G of IRDAI (Insurance Brokers) Regulations, 2018 with regard to directors, principal officer and key management person of the applicant company.
- Principal Officer to submit a declaration that the applicant (directors/partners, principal officer and key management personnel of the company) are not suffering from any of the disqualifications specified under section 42 D of the Act.
- Details of infrastructure including IT infrastructure along with supporting evidence thereof like ownership/lease agreement papers with regard to office space/equipment/trained manpower, etc. for the registered office with the photopraphs of premises and the future planning for opening branch office at varous locations in the country and the estimated time frame.
- Projection of administrative expenses, salaries and wages and other expenses, draw the revenue account, the profit and loss account and the balance sheet for the projected 3 years.
- An organisation chart giving a complete picture of the company’s activities like IT, underwriting, risk assessment, claims settlement, marketing, accounts, back office etc.
- List of experienced personnel inducted from insurance background with good knowledge and experience of working in the areas of risk assessment, underwriting and claims management etc. Detail CV, copies of educational qualifications along with their appointment/joining letters of the people, so selected.
- Form O of IRDAI (Insurance Brokers) Regulations, 2018.
- Any other information, which is relevant to the nature of services rendered by the applicant entity for the growth and promotion of insurance business.
- Any other requirement as deemed necessary by the Authority.
- For more detail, Schedule I – Form C of IRDAI (Insurance Brokers) Regulations, 2018 may be seen.
What is the deposit requirements for Direct Broker/Reinsurance Broker/Composite Broker?
Every direct insurance broker shall keep deposit of Rs.10 lakhs with any scheduled bank and the deposit shall have a lien with the Authority. Further, every reinsurance broker/composite broker shall keep 10 per cent of the minimum capital/contribution specified under Regulation 19(1) for reinsurance/composite broker in fixed deposit, which shall not be released to them without the prior written permission of the Authority.
What is the fee for renewal of registration for various categories of brokers?
In case of direct brokers, reinsurance brokers and composite broker the fee for renewal of certificate of registration is Rs.1,00,000/- (Rupees One Lakh only), Rs.3,00,000/- (Rupees Three Lakhs only) and Rs.5,00,000/- (Rupees Five Lakhs only) respectively.
When the renewal application form for certificate of registration is to be submitted?
The application for renewal of certificate of registration shall be submitted as follows:
|Scenario||No. of days||Additional fee|
|1.||At least 30 days before the expiry of certificate of registration (CoR). (for example: if the date of expiry of CoR is 31/03/18, the application should reach before at least 01/03/18.)||Nil|
|2.||During 30 days before the expiry of certificate of registration (for example: if the date of CoR is 31/03/18, the application should reach during 02/03/18 to 31/03/18.)||Rs.100/-|
|3.||After the date of the expiry of certificate of registration upto a period of 60 days of the expiry of CoR. (for example: if the date of expiry of CoR is 31/03/18, the application should reach before 30/05/18.)||Rs.750/- plus reason for delay in submission.|
|An insurance broker is permitted to submit the application for renewal 90 days prior to the expiry of CoR.|
What documents are need to be submitted for renewal of certificate of registration?
Documents to be attached with the renewal application form are as follows:
a. Schedule I – Form K (Renewal Form)
b. DD or payment details of renewal fee.
c. Renewal checklist duly signed by a Director/Partner and the Principal Officer of the Company.
d. Shareholding pattern of the company as of now and at the time of previous renewal duly certified by a Charterred Accountant as per Schedule I – Form N.
e. Renewal training certificate for 25 hours undergone by the Principal Officer and Broker Qualified Persons.
f. Undertaking duly signed by a Director/Partner and the Principal Officer of the company as per Schedule I – Form O.
g. List of Broker Qualified Persons along-with the Branch Office they are reporting.
h. Business premium figures and list of top 10 clients year-wise for the last three years.
i. Certificate from CA certifying compliance of Regulation 33 in respect of Reinsurance/Composite Insurance Brokers.
j. Any other documents specific to the applicant.
Is an insurance broker allowed to do any insurance business after the expiry of certificate of registration?
No, the insurance broker shall only be allowed to provide servicing of the policies of the existing policyholder.
When the Principal Officer and Broker Qualified Persons of an insurance broker should seek a renewal training (theoretical and practical) of certificate of registration?
The Principal Officer and Broker Qualified Persons should complete the renewal training within six months prior to the expiry of three years from the time the previous training was completed.
Where the Principal Officer and Broker Qualified person should approach for their renewal training?
The Principal Officer and Broker Qualified person should approach for their insurance broker renewal training to Insurance Institute of India /Insurance Brokers Association of India / National Insurance Academy or any other body recognised by the Authority.
How can we get the status of the application?
It may be obtained at https://www.irdabap.org.in through login.
What content should be mandatory in the registered broker’s communication with all stakeholders?
Every insurance broker should display, in all their correspondences with all stakeholders, their name registered with the IRDAI, address of the registered and corporate office, IRDAI registration number, the category for which the insurance broker is registered, validity period of the registration. Further, insurance broker should not use any other name in their correspondence/literature/letter head without the prior approval of the Authority.
Whether the investment in the applicant/broking entity by the promoters/shareholders/partners could be borrowed funds or loans?
The investment in the applicant/broking entity by the promoters/shareholders/partners should be from their own funds and not from any other sources. Own funds do not include funds arranged by way of borrowings or loans.
If the FDI is its maximum limit, who should keep the ownership and control of the entity.
The registered insurance broker should be governed by Indian owned and controlled guidelines
What is ceiling on Indian Investors?
The investors excluding the foreign investors shall hold shares in an insurance broker subject to (i) where there are one or more investors in an insurance broker, no investor shall hold shares in an insurance broker exceeding 25 per cent of the paid up equity capital of such insurance broker and (ii) all investors as indicated at (i), jointly shall not hold more than 25 per cent of the paid up equity share capital of the insurance broker.
Can an investor in an insurance broker be an investor in other insurance brokers?
Yes, but the investor should not be a promoter in more than one insurance broker.
Is there any regulatory provision to take Professional Indemnity Insurance policy to insurance broker?
Yes, 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.
What is the limit of indemnity for any one claim and in the aggregate for the year in the case of insurance of insurance broker?
Limit of indemnity are follows:
|Sl. No.||Category of insurance broker||Limit of Indemnity|
|1.||Direct Broker||Two times remuneration received at the end of every financial year subject to a minimum limit or Rs.1 Crore and at least Rs.50 Crores, if twice the remuneration limit is equal to or more than Rs.50 Crores.|
|2.||Reinsurance Broker||Two times remuneration received at the end of every financial year subject to a minimum limit or Rs.4 Crores and at least Rs.75 Crores, if twice the remuneration limit is equal to or more than Rs.75 Crores.|
|3.||Composite||Two times remuneration received at the end of every financial year subject to a minimum limit or Rs.5 Crores and at least Rs.100 Crores, if twice the remuneration limit is equal to or more than Rs.100 Crores.|