How to become an insurance broker in India?

The COVID pandemic has made people realize the futility of life. Now more than ever, they are thus trying to make their future secure by buying insurance policies. In their quest of purchasing the right policy, they are looking for the right insurance agent. Someone who can guide them towards the right scheme that suits their and their family’s needs.

With the right steps, you can become one. This article teaches the steps that you must follow to get insurance broker license in India and thus become an insurance broker.

What is an insurance broker?

An insurance broker is a person or a company that acts as an intermediary – a middleman – between an insurance company and the customer.

He leverages his knowledge about the insurance policies to assist the customers in choosing the best policy that suits their need. On the other hand, they act as the representatives of single, sometimes multiple insurance companies.

So, as an insurance broker, you need to walk on a thin line keeping in mind the needs of the customers and your loyalty towards the insurance companies that you represent.

How can one become an insurance broker in India?

To become an insurance broker in India, you need to submit the application for Insurance Broker License to the IRDA. The Insurance Regulatory Development Authority of India shall then analyze your financial, technical, and ethical state to decide whether or not you deserve to be an intermediary between an insurance seeker and an insurance company.

What is the insurance brokers license?

Insurance broker license is the permission to act as an insurance broker in India. Governed under the Insurance Regulatory Development Authority Act, 1999, the license has some specific regulatory terms that you’ll need to adhere to operate your business.

What are the types of insurance brokers in India?

Before you pursue the steps to become an insurance broker, choose the type of insurance broker that fits your financial condition and technical acumen. There are three types of insurance brokers in India:

Direct Insurance brokers: Brokers that act as an intermediary between an insurance company and a customer. Equipped with ample of knowledge about the insurance policies, their job is to guide the customers to choose the right one. Additionally, the direct insurance brokers also assist clients set up their E insurance account and pay the premiums on time.
Re-insurance brokers: Reinsurance brokers are intermediaries between an insurance companies and insurance risk management company (reinsurance company). Their job is to provide insurance companies with the right reinsurance firm to provide risk management facilities of the insurance company’s insurance policy.
Composite broker: A composite broker, like the name suggests, is an amalgam of a direct insurance broker and a re-insurance broker.

What is the eligibility criteria to obtain an insurance broker license?

To obtain an insurance broker license, you must the eligibility criteria for each of the following requirements:

Corporate structure:
1. You should have registered a company under the Companies Act 2013; or
2. You should have a partnership firm registered under LLP act; or
3. You should have a cooperative society registered under Co-operative society act, 1912; or
4. You should have prior authorization from the IRDA to act as an insurance broker.
Capital requirement:
1. Direct insurance broker: INR 75 Lakh
2. Re insurance broker: INR 4 Crore
3. Composite broker: INR 5 Crore
Net worth requirements:
1. Direct insurance broker: INR 50 Lakh
2. Re insurance broker: 50% of capital requirements
3. Composite broker: 50% of capital requirements.
Deposit requirements: At the time of commencing your business, IRDA will ask you to deposit and maintain a certain amount of money in a scheduled bank. How much that amount is varies depending upon the type of insurance broker you are.
1. Direct insurance broker: INR 10 Lakh
2. Re-insurance broker: 10% of the Capital
3. Composite insurance broker:10% of the Capital
Office space facilities: As an insurance broker, it’s crucial that you have an adequate office space, trained manpower, equipment and IT infrastructure. Without them, the IRDA won’t see you as a suitable candidate for the insurance broker license.
Qualification requirements: As an insurance broker, you must have the following additions in your company:
1. At least two qualified insurance brokers with the training necessary to act as per the IRDA regulations.
2. A principal officer with the necessary qualifications. He has to oversee the insurance broker operations of the company.
The purpose of your business must be clear, and only one: To provide insurance broker services to your clients.

What are the steps to obtain the insurance broker license?

6 steps are all that you need to obtain the insurance broker license to the IRDA. They are as follows:

Incorporate your company:

Your first priority is to give your insurance broker business an entity. You have the choice between registering that business as either a private limited company or a limited liability partnership.

Train the principle officer and two insurance brokers:

Once you’ve incorporated your business, your next task is training your professionals who would act as the flag-bearers of your company. IRDA provides specialized training for insurance brokers and principal officers. Make your professionals to go through that training and upon completion, they will be tested by the IRDA that once they succeed, will give them a final certificate.

Gather the required documents for Insurance broker license:

Furnish the documents as per the type of insurance broker you want to become. The general documents – ones that are common for all three categories of brokers – are as follows:

Certificate of incorporation
IRDA broker certification
MOA and AOA
Net worth certificate
Bank account statement
Audited balance sheet of the company
Certified declaration that say that you meet the “FIT and proper” criteria
Certified declaration saying that you have no pending criminal record.

File the online application:

Go to the official IRDA portal and file the online application after registering yourself as a new user. As you file the application, you’d need to upload the required documents to verify the information you’ve entered. Do so in the format specified in those sections.

Monitor the application:

The IRDA will start to scrutinize your application as soon as it received it. If it finds any issues, you’ll be notified to fix them. Do so and you’ll jump to the lat step.

Grant of IRDA broker license:

Once you’ve cleared all the pending issues of your application, IRDA will grant you the insurance broker license. As soon as you do, you need to make the final deposit and commence your business.

After the license is issued, it will be valid for 3 years. After the end of this validity period, you’d need get the facilities for insurance broker license renewal.

Conclusion

Insurance broker license lets you start an insurance business providing personalized insurance assistance to your customers. While it’s not easy to obtain, the profit you’d able to make because of it would make the ordeal of obtaining it worth it.

And even that non-easy process has a solution. But you need to reach out to Registrationwala to know what that is.