Life Insurance Broker License
Starting a life insurance business can be taxing in the competitive market. But that is what most emerging firms do; they take risks in the hope of a reward. Knowing how valuable this sector is, every year ample firms step into the life insurance sector but only a few survive cut-throat competition. To stay afloat and competitive, these firms often hire IRDAI-recognized life insurance brokers specialized in upscaling sales, closing deals, and managing risks. If you are eyeing a life insurance broker license as an individual or firm, getting IRDAI approval is paramount. This article spans various aspects of the life insurance broker license, including legalities, processes, and documents.
Understanding the Role of an Insurance Broker
An Insurance Broker overcomes sale barriers for their insurer clients by serving potential insurance-seekers with a tailored approach, which involves:
- Yielding personalized insurance solutions
- Assisting in claims management.
- Facilitating advice on coverage options
The Insurance Regulatory and Development Authority of India (IRDAI) is an apex authority that regulates insurance brokers under the Insurance Brokers Regulations, 2018.
Categories of Insurance Brokers
IRDAI has created five categories of insurance brokers within the purview of Insurance Brokers Regulations, 2018. These include:
- Direct Broker (Life)
- Direct Broker (General)
- Direct Broker (Life & General)
- Reinsurance Broker
- Composite Broker
Each category serves a distinct aspect of insurance and reinsurance, addressing specific clients’ needs and audiences.
Understanding the Role of Insurance Brokers
Direct Broker:
From soliciting insurance business and rendering underwriting information to negotiating premiums and assisting in claims settlement, direct broker performs multitue of tasks, bridging the gap with insuers and potential clients.
Reinsurance Broker:
Reinsurance broker performs tasks like arranging reinsurance, advising on technical data, selecting reinsurers, and negotiating terms on behalf of clients.
Composite Broker:
Composite broker can serve the dual purposes; it can perform the functions of direct and reinsurance brokers.
Eligibility Criteria and Requirements Concerning Life Insurance Broker License
To qualify for a Life Insurance Broker License, applicants must meet certain criteria:
| Eligibility Requirement | Details |
| Corporate Structure | A firm seeking life insurance broker license must be registered under one of the following: Companies Act 2013, LLP under LLP Act 2008, etc. |
| Capital Requirements | ₹75 lakhs for Direct Broker, ₹4 crores for Reinsurance Broker, ₹5 crores for Composite Broker |
| Net Worth Requirements | ₹50 lakhs for Direct Broker, 50% of minimum capital for Reinsurance/Composite |
| Professional Qualifications | Key management persons and principal officers must meet specified qualifications |
| Infrastructure | Adequate office space, IT infrastructure, and trained manpower |
Online Application Process Regarding Life Insurance Broker License
The steps for applying for a Life Insurance Broker License online are as follows:
- Head to the IRDAI portal and log in. If you are new to the portal, create an account with valid credentials.
- After account creation, log in to the portal and head to the application section to find Form B.
- Open Form B and start filling it out with relevant details concerning the company, net worth, capital, directors, partners, etc.
- Once you have entered the required details in the form, proceed with document uploading in the recommended format.
- Next, submit the applicable fee. Refer to the below section to know more about the fee structure.
- Once done, the form shall be redirected to the respective IRDAI department for inspection. The vetting process may last for a few days depending on the licence type and compliance threshold.
- The IRDAI, after performing detailed due diligence, shall grant the license provided no error or misleading emerges during the inspection.
Understanding Fee Structure for an Insurance Broker License
| Broker Type | Initial Registration Fee | Renewal Fee (3 Years) |
| Direct Broker | Rs. 25,000 | Rs. 1,00,000 |
| Re-insurance Broker | Rs. 50,000 | Rs. 3,00,000 |
| Composite Broker | Rs. 75,000 | Rs. 5,00,000 |
Renewal Norms Concerning Insurance Broker License
- Use FORM K of Schedule I for license renewal. Make sure to file this application with IRDAI before 30 days from the expiry.
- Application breaching this timeline would attract a fine amounting to Rs 100/-.
- Application for expired license which has spent 60 days without renewal attract a fine of Rs. 750/-.
- Applications that exceed the 60-days timelines shall not be entertained for renewal for at least one year. During this 1-year timeline, company cannot engaged with broking endevours cited in the govering legislation.
- Applicants applying for renewal post 90 days of expiry shall not be entertained by the authority. There is no counter measure to revive this situation. Such licensee must stay away from brokering activities, except serving the prevailing clients.
Compliances Checklist for Life Insurance Broker License Holders
- Maintain professional indemnity insurance at all times.
- Ensure capital and net worth requirements are met to stay compliant.
- Have a minimum of two qualified personnel.
- Principal officers must meet underlying qualifications.
- Maintain proper office space and infrastructure.
- Handle client grievances within 14 days.
- Abiding by the IRDAI’s code of conduct is paramount.
- Maintain accurate books of accounts is compulsory to maintain transparency
- Submit semi-annual net worth certificates.
- Avoid multi-level marketing and solicitation.
Conclusion
Becoming a licensed Life Insurance Broker give access to endless potential in the robust insurance sector. By understanding what it takes to be a broker and its post-registration, a licensee can go an extra mile while staying profitable.
For aspiring insurance brokers, securing a Life Insurance Broker License is the first stride in the insurance sector. The license revolves around stringent regulations, be it a matter of registration or performing a specific endevour. Therefore, it is vital to devise your path to registration carefully with an expert firm like Adviso, where licensing made easy through holistic and transparent approach.
Read Our Article: Insurance Broker License Requirements
