How to start an Insurance Broker Company in India?

Are you looking to start a business venture in the insurance sector in India? If yes, starting as an insurance broker company could be a wonderful move of yours. But, how can you become an insurance broker? In this post, you will get to know everything about insurance broking and how can you give wings to your dream of starting an insurance broker business in India. 

What does an insurance broker mean?

An Insurance Broker refers to an insurance unit licensed by the IRDA to deliver insurance broking. To become an insurance broker, you are obliged to meet the eligibility criteria, gather specific documents, and submit an application for the IRDA license. In the following post, you will get to know the exact process of how you can start an insurance broker business in India.

There are precise agreed guidelines in place in regard to insurance broking houses in India. These guidelines are governed by the Insurance Regulatory and Development Authority of India (IRDAI) and include the Insurance Regulatory and Development Authority Act, 1999 and the Insurance Regulatory Development Authority of India (Insurance Brokers) Regulations, 2018. Therefore, after an applicant obtains an insurance broker license, they are supposed to abide by the requirements of the aforementioned guidelines. Brokers are meant to serve as a middle man between insurance companies and the insurance buyers. This kind of system is meant to enable the sale of large number of insurance policies.

Types of Insurance Brokerage Company

Direct Insurance Company

A direct insurance broker company’s main job is to secure insurance policies which means these companies help interest people in the purchase of an insurance policy. Their another responsibility is to help insurance buyer pick a group of strategies and get a commission against the sale of a policy. Direct broker insurance companies also indulge in the delivery of market-based information about insurance. Following are the types of the direct insurance broker.

Reinsurance Broker

As its name suggests, a reinsurance broker purchases reinsurance for a company. This task involves thorough negotiation with the insurance company to find the best terms for the insurance buying company.

Composite Insurance Broker

These insurance broker companies possess a license to provide insurance services. They provide both life and general insurance policies. Insurance companies or authorities restrictively approve licenses to such applicants.

Eligibility Criteria For Insurance Brokerage License

When it comes to securing license for insurance broker, the applicant needs to be registered with IRDAI. In addition, the government has proposed minimal requirements for getting a license as an insurance broker. For the purpose of applying for an insurance brokerage license, the applicant must therefore meet the qualifying requirements.

Who are eligible to secure the license for an insurance broker company?

Below people can be held eligible to apply for an insurance broker license

• Companies registered under the Companies Act of 2013[1].
• LLPs (Limited Liability Partners) setup under the Limited Liability Partnership Act, 2008.
• Registered co-operative society incorporated under the Co-operative Societies Act, 1912 or any other version of it.

Particulars Needed To Secure An Insurance Broker License

• Schedule I- Form B
• Copies of MoA & AoA of the company
• Schedule I-Form G
• Schedule I-Form C
• Declaration that POs and directors, partners, etc. are not excluded according to the Section 42D of Insurance Act
• Details of partners, directors, promoters, advertisers, etc.
• Qualified agents list with their academic qualifications and professional experience
• Company’s bank account details
• Shareholders list (current + proposed)
• Details of Principal Bankers’ along with the details of the statutory auditors.
• Balance sheet of audited company
• Copy of the board resolution
• Details of business location infrastructure including specifics like office space, work power, etc.

How to apply for an insurance brokerage license in India

The applicant needs to arrange all the documents required to furnish an insurance brokerage application for an insurance broker company license. It is made up of two steps:

• Now, the person applies for the issuance of certificate of registration

• Only after this, he can go ahead with insurance broker license registration.

• The applicant is obliged to submit a duly filled insurance broker license application Form B of Schedule-I. Other necessary documents and the application charges, have to be provided to the Insurance Regulatory Development Authority of India (IRDAI).
• The documents submitted by the applicant will be thoroughly checked by the concerned authorities. They may also raise a few questions if the find any discrepancy  or if they need extra documents.
• The authorities will validate the documents of the insurance broker company. And if the documentation and detailed provided are reasonable, the authority will provide an in-principal approval to the insurance brokerage company. ‘In-principle’ simply means that the applicant has fulfilled all requirements needed for a certificate of registration.
• After securing in-principle endorsement, the company needs to comply with all extra requirements and also pay licensing charges. The payment towards various charges can be done through Demand Draft (DD) or electronically in favour of IRDAI, Hyderabad.
• After satisfying all the eligibility requirements & regulations prescribed by the IRDA Insurance Broker Regulations, 2018, the company is handed over a ‘Certificate of Registration’.
• If the required eligibility criteria are fulfilled, a license will be issued in the name of the applicant. This license would carry a validity of 3 years from issuance date.

Similar Post : The Advantages of Having an Insurance Broker License

Rejection of Insurance Brokerage Company Application

If the authorities come to know that the applicant does not meet the qualifying requirements, they can choose to put down the insurance broker business application. In any scenario, the applicant should hear from the authorities regarding the rejection within 30 days after receiving the notice.

Point To Bear In Mind

 If the applicant’s insurance business application is denied, the only option is to reapply for the license. 

The Conclusion

Insurance companies turn saved money into profitable ventures. Insurance loss makes it possible to lessen financial stability and encourages trade and commerce, both of which lead to long-term, sustainable economic growth and development.

As a result, insurance companies are essential to the long-term expansion of the US economy. Brokers of insurance are authorized to represent any insurance company in offering the best coverage. You can get professional guidance on the right insurance products from Insurance Brokerage Company. If you would like more information about Insurance Brokerage Company, please get in touch with our experts today.