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Requirements for licensing of an Insurance Broker

Requirements for licensing of an Insurance Broker

(a) Application for broking licence, duly filled in and signed by the authorised signatory, alongwith supporting documents

(b) Memorandum and Articles of Association shall contain “solicitation or procuring insurance business as an Insurance Broker” as the main object

(c) Appointment of a Principal Officer who is the Director or the Chief Executive Officer appointed exclusively to carry out the functions of an insurance broker. Such a Principal Officer is subject to minimum qualifications as prescribed under the Regulations and shall undergo theoretical and practical training from IRDA accredited training institutes and has passed the examination conducted by National Insurance Academy, Pune or any other examining body.

(d) Atleast two employees of the applicant entity who have the minimum qualifications as prescribed by the Regulations and has undergone the practical training and passed the examination as mentioned above. Only such employees are authorised to solicit or procure insurance business on behalf of the insurance broker. An insurance broker may have as many number of authorized employees fulfilling the above conditions, as required depending on the business plan.

Insurance
[Post Image Courtesy of Stuart Miles at FreeDigitalPhotos.net]

(e) The entity formed shall be solely engaged in the business of insurance broking and no other business

(f) The non-resident equity in insurance broking entity shall not exceed 26%

(g) Minimum capital requirements for the broking entity:

Direct Broker has a minimum capital requirement of `50 lakhs

Reinsurance Broker has a minimum capital requirement of `200 lakhs

Composite Broker has a minimum capital requirement of `250 lakhs

(h) A minimum of 20% of the initial capital shall be kept in a Bank deposit which shall not be released without the prior approval of IRDA

(i) A professional indemnity insurance policy shall be taken by the broker as prescribed in the Regulations. IRDA may suitable cases allow a newly licensed broker to product the policy within 15 months from the date of issue of original licence

(j) Payment of Registration fee as follows:

The Direct Insurance Broker has `20,000 as Amount of Registration fee payable

The Reinsurance broker has `25,000 as Amount of Registration fee payable

The Composite Insurance Broker has `40,000 as Amount of Registration fee payable

(k) Qualifications and Disqualifications

The Principal Officer and each of the employees authorised to sell on behalf of the Insurance Broker shall possess one of the following minimum qualifications:

(a) Bachelor’s or Masters Degree in arts, science or social sciences, engineering or its equivalent, law or its equivalent

(b) Master’s Degree in Business Administration or its equivalent from any institution or university

(c) Associate or Fellow of the Insurance Institute of India or Institute of Risk Management or Institute of Chartered Accoutants of India or Institute of Cost and Works Accountants of India or Institute of Company Secretaries of India or Institute of Actuaries of India or a Certified Associate of the Indian Institute of Bankers

(d) Such other qualification as may be prescribed by IRDA

The Insurance Broker shall not suffer from any of the disqualifications which are similar to the disqualifications prescribed for an individual agent

Insurance Law And Practice - ICSI

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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