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Documents Required to Obtain Insurance Broker License in India - BizAdvisors

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Documents Required to Obtain Insurance Broker License in India

Insurance Broker License in India

An organization or knowledgeable person working through its directors, partners, or employees who are familiar with insurance legislation and have the necessary knowledge of insurance products is awarded an Insurance Broker License. They inform people of the need for insurance. An insurance broker serves as a point of contact between a potential consumer and an insurance agency and offers them a range of services. In India, there are various laws that must be followed when dealing with insurance brokers. The Insurance Regulatory and Development Authority of India develops such regulations (IRDAI). The Insurance Regulatory and Development Authority Act of 1999 and the Insurance Regulatory Development Authority of India (Insurance Brokers) Regulations of 2018 are two examples of the regulations that fall under this category. Therefore, the applicant must adhere to the requirements of the aforementioned laws and regulations once they have obtained an Insurance Broker License. In this article, we will discuss the Documents required to obtain Insurance Broker License in India.

What is Insurance Broker License?

Brokers and agents in the insurance industry are commonly confused with one another. The two do, however, diverge on a few lines. An insurance broker is a professional that stands in for clients and ensures they have the best insurance policy for their needs. On the other hand, a commission-based insurance agent offers customers the products of the insurance industry.

However, it should be kept in mind that the insurance agent talks on behalf of the insurance company. Because they are the company’s representatives, the agent also has the power to seal insurance sales agreements. Insurance brokers do not possess this right; instead, they are required to pass over the account to the insurance agent or to the firm itself.

Why Insurance Broker License in India is needed?

The following are a few reasons to obtain Insurance License:

  • To make certain that the Insurance Business sells a sizable number of insurance products.
  • To make certain that all pertinent insurance-related laws and regulations are followed.
  • To keep an eye on things and perform market research on things linked to insurance.
  • To represent clients’ interests in negotiations for insurance-related products.
  • To guarantee that the insurance industry is governed by a nodal authority.
  • A licence for insurance brokers would likewise reassure clients of the brokers’ sincerity.
  • To bargain for clients when it comes to policies and premiums.

Different types of Insurance Broker License in India.

The following are the different types of Insurance Broker License: 

  1. Direct Broker

Direct brokers are granted licenses by the Insurance Regulatory and Development Authority of India (IRDAI), which helps them explain and negotiate with insurers by getting to know their clients’ insurance needs. A direct broker gives advice services in respect to the best policy and its associated terms and conditions.

These brokers follow the instructions provided by the clients. They also need to monitor changes in the insurance markets, maintain tabs on insurance transactions, and assist in negotiating claim settlements. A net worth of Rs. 50 lakhs and Rs. 75 lakhs in capital are needed for registration, respectively.

  1. Composite Brokers

Composite brokers have two functions since they mix direct and reinsurance brokers. The minimum capital requirement for composite brokers is at least Rs. 5 crores, and they must also keep their net worth at least 50% of that amount.

  1. Reinsurance Broker

Reinsurance serves as insurance companies’ protection. Direct insurers and reinsurers enter into reinsurance contracts through reinsurance brokers. Because he/she works for both parties, he/she is governed by their contracts. These brokers not only find the best protection for each client they represent, but they also negotiate contracts. You must maintain a net worth of at least 50% of the required capital, or at least Rs. 4 crores, in order to register.

Documents required for Insurance Broker License

The following are the documents needed for Insurance License:

  • Submission of pertinent data as specified in Schedule I – Form B
  • According to the provisions of the 2013 Companies Act[1], a copy of the articles of association and memorandum of association must be provided.
  • Payment of the license fee for the specific category of an Insurance Broker.
  • Employees beginning a business as insurance brokers should receive training, and Schedule-I Form F should contain pertinent information about the principal officer.
  • It is necessary to have Fit and Proper certification, as per Schedule-I Form G.
  • A major management executive, principal officer, or director of the organization has made a declaration stating that they are not ineligible for any type of office under the Act.
  • The Form must include information on the Directors/Partners, Promoter, and Key Management Personnel.
  • List of competent individuals with their credentials in Schedule I, Form F, which is responsible for managing and acquiring brokerage business.
  • Along with the applicant’s bank account number, details of the principal bankers and statutory auditors are also provided.
  • Information on infrastructure, particularly IT equipment, and accompanying documentation, such as a lease agreement or proof of ownership, demonstrate that there is enough space for administering the brokering firm.

Validity of Insurance Brokers License Certificate of Registration

  • A certificate issued by the IRDAI is good for three years after it is issued. This would be dependent upon the authority’s directive.
  • Without a valid certificate and registration with the authority, an Insurance Broker is not entitled to conduct Insurance Broker activity.

Conclusion 

Today’s market offers a wide variety of insurance products, which can make it challenging for the average individual to choose the best insurance. An Insurance Broker helps clients make wise financial decisions by advising them on the best options for their needs. An Insurance Broker acts as a middleman between the general population and insurance companies. They support customers in making the ideal insurance plan selections for their unique financial requirements. Before starting any activity related to insurance brokerage, a corporation needs to get an Insurance Broker Licence. Seek professional advice to get Insurance Broker License. You can also reach at Bizadvisors.io for more information. And seek Professional help for Broker License Certificate from our experts.

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