In the fast-paced world, everyone needs safety for themselves and their families. That’s where different insurance products step in. Over the past years, the demand for insurance products has skyrocketed, given the rising medical expenses and inflation. These products provide adequate financial aid when required at an affordable premium. This massive shift in demand for insurance has underpinned a remarkable growth opportunity for budding entrepreneurs in the form of “brokering”. By securing the Insurance Agent Broker License, an entrepreneur can enter the insurance advisory, claim settlement, and policy placement fields, reaping handsome rewards and commissions. Such a licensee can serve as a helping hand for various insurance companies.
If you plan to operate as an insurance agent broker in India, obtaining an Insurance Agent Broker License is required. This process is governed by the Insurance Regulatory and Development Authority of India (IRDAI) to encourage professionalism, compliance, and consumer protection. The following is a detailed guide to help you understand the eligibility requirements, documentation, process, fees, and post-licensing requirements for obtaining your license.
1. What is an Insurance Agent Broker License?
An Insurance Agent Broker License is an official authorization from IRDAI that permits a company or individual to act as an intermediary between insurance providers and customers. With this license, insurance brokers can offer risk assessment, policy placement, claims handling, and advisory services for multiple insurance companies.
There are three types of brokers:
Direct Brokers – Deal directly with life and general insurance products.
Reinsurance Brokers – Specialise in reinsurance arrangements and placements.
Composite Brokers – Providing direct and reinsurance broking services.
2. Benefits of Getting an Insurance Agent Broker License
- Legally Permitted Operations – Adhere to the rules of IRDAI and evade fines.
- Increased Trust and Market Access – Establish trust in individual and corporate customers.
- Availability of Multiple Insurers – Provide a range of policies by various insurance companies.
- Revenue Opportunities – Receive brokerage commissions, consultancy fees, and charge service fees.
3. Eligibility Criteria for Insurance Agent Broker License
You must ensure that your business is eligible under the required norms before you apply:
Business Structure
It should be a company registered under the Companies Act, an LLP, or a Co-operative Society.
Minimum Capital Requirement
- Direct Broker – 75 Lakhs
- Reinsurance Broker – 4 Crores
- Composite Broker – 5 Crores
Net Worth Maintenance
- Direct Broker – Minimum 50 percent of the capital requirement.
- Reinsurance/Composite Broker – Minimum 50% of capital requirement.
- Qualified Principal Officer – Has to undergo training approved by IRDAI and pass the examination.
Professional Indemnity Insurance
The minimum amount of coverage should be twice the annual remuneration or ₹ 50 Lakhs, whichever is greater.
4. Documents Required for Insurance Agent Broker License
Prepare the following documents:
- MOA/AOA or LLP Agreement and Certificate of Incorporation.
- Board Resolution for applying for an insurance agent broker license
- Qualification, training, and a passing certificate from the Principal Officer.
- Information about directors, partners, and key management staff.
- Last three years of audited financial statements (where applicable)
- Evidence of infrastructure and manpower.
- Professional Indemnity Insurance policy.
- Statement of adherence to IRDAI regulations.
5. Application Process for Insurance Agent Broker License
Here’s a step-by-step process that will help you secure the insurance agent broker license seamlessly:
Step 1: File the Application
Fill in Form B under the IRDAI (Insurance Brokers) Regulations, 2018.
Pay Application Fee:
- Direct Broker – 25,000
- Reinsurance Broker – 50,000
- Composite Broker – 75,000
Step 2: IRDAI Scrutiny
Authority examines documents, eligibility, and capital adequacy. Non-compliance can result in severe penalties, including the revocation of the application. Therefore, make sure to double-check everything before filing. Or you can consult Adviso for a seamless experience.
Step 3: Principal Officer Training & Exam
During the assessment, the applicant will undergo 50-100 hours of training based on the type of broker.
Step 4: In-Principle Approval
Upon successful completion of the assessment and training, the IRDAI will grant the in-principle approval. Please note that this is not a final license. The fee for this approval varies depending on the type of license. Here’s what it looks like:
- Direct Broker – 50,000
- Reinsurance Broker – 1,50,000
- Composite Broker – 2,50,000
Step 5: Final License Issuance
The authority will grant the license for a period of 3 years, with the option for renewal.
6. Renewal of Insurance Agent Broker License
The licensee must renew this license at least 30 days before the deadline. The renewal fee will vary by the type of license. Here’s what the renewal fee looks like.
- Direct Broker – 50,000
- Reinsurance Broker – 1,50,000
- Composite Broker – 2,50,000
Note: Please note that the license renewal requires the submission of crucial documents, such as financial statements, compliance reports, and Professional Indemnity Insurance.
7. Compliance after licensing Insurance Agent Brokers
Licensed brokers are required to fulfill continuing compliance requirements:
- Keep Records: KYC, policy placement, and client information for 7 years.
- File Reports: Semi-annual and annual reports to IRDAI.
- Capital Adequacy: Always have a minimum net worth.
- Annual Audit: Have accounts audited by a Chartered Accountant.
- Adhere to AML and KYC Standards: Adhere to due diligence as recommended by FATF and IRDAI.
- Code of Conduct: Place the interest of the clients, transparency, and ethical dealing first.
8. Sanctions against Non-Compliance
Failure to comply with the IRDAI norms may lead to:
- Penalties up to Rs 1 Crore
- Suspension or cancellation of the insurance agent broker license
- Disqualification of directors or senior managerial personnel.
Why use Adviso Assistance in License Application?
As a reliable and seasoned partner, Adviso can simplify the complex process of obtaining an insurance agent broker license by:
- Making proper and complete documentation.
- Communicating with IRDAI to seek clarifications.
- Helping in the training and exam of Principal Officers.
- Assuring compliance after approval.
So, what’s holding you back? Act now and contact Adviso for a seamless licensing journey.
FAQs on Insurance Agent Broker License
Q1: How long is an insurance agent broker license valid?
It lasts for 3 years and must be renewed before it expires.
Q2: Can an individual apply for an insurance agent broker license?
No, you must apply as a company, LLP, or cooperative society.
Q3: What is the training needed to be a Principal Officer?
Direct brokers require 50 hours of training, and composite/reinsurance brokers require 100 hours.
Q4: Can an insurance brokerage company allow foreign investment?
Yes, insurance intermediaries are permitted to 100% FDI using the automatic route.
Q5: What happens if I don’t renew my insurance agent broker license?
You could be fined, suspended, or even have your license cancelled.
Also Read: IRDAI Registration for Insurance Companies
