Corporate Agency License

An Overview of Corporate Agency License

A corporate agent is usually an organization or company that represents the interests of an insurance company. Therefore, a corporate agent acts in the best interest of the insurance company. A corporate agent must adhere to and follow several guidelines.

A corporate agent must obtain a corporate agency license to operate on behalf of the insurance company. When a company sells vehicle insurance on behalf of an insurance organization, it is a corporate agent for the organization.

Companies, as well as banks, can obtain a corporate agency license. Therefore, when a bank gets this license, such a bank would be representing the interest of the insurance organization. Financial institutions offer insurance packages to customers based on their requirements.

What is a Corporate Agency License?

A corporate agency license is a permit issued by the Insurance Regulatory and Development Authority of India (IRDAI) to a company, enabling it to function as a corporate agent. Any company wanting to work as a Corporate Agent in India must have a license.

What are the Categories of Corporate Agents?

Once the corporate agent obtains a license, the corporate agent becomes eligible to possess the ability to be involved in life insurance, general insurance, health insurance & composite insurance. Here, we have discussed below the categories of corporate agency Licenses for your better insight such as:

1. Corporate Agent (Life Insurance)

Corporate agents who specialize in life insurance can form partnerships with a maximum of three companies. Their main duties involve marketing, requesting, and obtaining various life insurance products. Registration of insurance corporate agent is essential.

2. Corporate Agent (General Insurance)

Corporate agents specializing in general insurance operations are permitted to work with up to three general insurance firms. Their main duties involve requesting, promoting, and obtaining various forms of insurance products for both individual and business customers.

3. Corporate Agent (Health Insurance)

Agents working in the corporate sector focusing on health insurance are allowed to form partnerships with three different health insurance companies. Their main duties involve promoting, purchasing, and providing services for health insurance products.

4. Corporate Agent (Composite Insurance)

Corporate agents who specialize in composite insurance provide a wide selection of insurance products that protect against both life and non-life risks. These agents can offer customers a complete range of insurance products, including life, health, and general insurance plans, to address their specific financial protection requirements.

Why the Corporate Agency License is required?

A corporate agency license is needed to safeguard customers, maintain market integrity, and legal obligation, uphold professional norms, and allow for regulatory monitoring and accountability. Licensing is crucial in industries such as insurance and finance as it plays a key role in preventing fraud and supporting ethical business practices.

Here we have mentioned below certain pointers for your better understanding of the reason behind the corporate agency license:

• To ensure that the corporate agent acts on behalf of the insurance business.
• To solicit products on behalf of the insurance business.
• To act in the best interests of life insurance, non-life insurance, and general insurance business.
• This license is required for sufficient regulation in the insurance business.

Who Regulates Licensing of Corporate Agency?

The primary regulatory Authority for the corporate agency license is the IRDAI. The law regulating corporate agents is the IRDAI (Registration of Corporate Agents) Regulations, 2015.

What is the Importance of a Corporate Agency License?

A Corporate Agency License is essential for ensuring legal adherence, establishing trustworthiness, and safeguarding consumer well-being. It allows businesses to provide various insurance options, improves market reach, and generates additional sources of income.

Here we have discussed the importance of a corporate agency in obtaining licenses such as:

1. Representation of Agency

The corporate agency license guarantees that the entity has the necessary authorization to represent the insurance business or businesses.

This official authorization creates a legal structure allowing the company representative to participate in insurance-related activities.

2. Product Solicitation

The license allows corporate agents to promote insurance products for insurance companies and enables them to reach a wider range of customers.

3. Regulatory Compliance

Corporate agent licenses serve as a regulatory tool to guarantee adequate supervision and authority in the insurance industry. It aids in preventing misconduct and false actions, thus protecting the interests of insurers and policyholders.

4. Market Accessibility

By obtaining a corporate agency license, a company can offer clients a wide selection of insurance products from various insurers, offering improved coverage options. Insurance companies are inclined to collaborate with licensed agencies to increase business opportunities and extend market reach.

How does the Corporate Agents Make Money?

Corporate agents make money by collecting commissions, salaries, bonuses, consulting and advisory fees, and retainers. They might also see advantages from sharing profits, owning equity, paying transaction fees, and receiving royalties.

Corporate agents receive commissions, consultants receive fees for their expertise, and intellectual property managers earn royalties.

Eligibility Criteria for a Corporate Agent License

To acquire a corporate agent license, a company needs to be officially registered and have a specified chief officer who meets the necessary qualifications. The company needs to hire skilled staff with necessary certifications, keep strong financial standing, and show adherence to training and operational regulations.

The following criteria would apply to secure a corporate agent license:

1. Minimum Capital Requirements

An applicant with an insurance distribution business must have equity capital or contribution and a net worth of Rs. 50 Lakhs. The company must maintain this net worth requirement at all times.

2. Applicant

To be registered as a Corporate Agent, the applicant must be the following:

• A company formed under the Companies Act, 2013 or the company law; or
• A Limited Liability Partnership under the LLP Act, 2008; or
• A Co-operative Society registered under the Co-operative Societies Act; or
• A banking company; or
• A corresponding new bank under the Banking Companies Act, of 1949; or
• A regional rural bank established under the Regional Rural Banks Act, 1976; or
• A non-governmental organization or a micro-lending finance organization covered under the Co-operative Societies Act, 1912 or a Non-Banking Financial Company registered with the Reserve Bank of India; or
• Any other person may be recognized by the Authority to act as a corporate agent.

3. Other Criteria

For the corporate agency license, the applicant must also satisfy other criteria prescribed as per the regulations:

• The applicant should not be disqualified under any law in force.
• The applicant requires adequate office space, equipment, and a trained workforce to discharge its activities effectively.
• According to the requirements of the Authority, the Principal Officer must be a graduate and pass the exam with the approved syllabus at the end of the training (a minimum of 50 hours of practical training for life, general, and health insurance, and 75 hours of training for composite insurance).
• The principal officer and the employees must not have violated the code of conduct which is prescribed by the Authority for securing the corporate agency license. This must be during the last three years.
• If the applicant has a business that is not related to insurance, then it must maintain an arm’s length relationship between the financial matters of the other business and the corporate agency business.
• The key management personnel must satisfy the FIT and PROPER criteria.

Documents Required for Obtaining Corporate Agent License

To obtain a corporate agent License, normally, you are required to provide an application form, along with incorporation papers and a board resolution granting permission for insurance operations.

One by one the documents required to obtain a corporate agent License are discussed below such as:

1. Submission of relevant information as required in the FORM-A.
2. Receipt of application fees.
3. Submission of charter documents of the applicant (MoA & AoA details)
4. Declaration of Fit & Proper Criteria from the Principal Officer.
5. Declaration of Fit & Proper Criteria from Directors & Partners.
6. Details of infrastructure, supporting evidence thereof like ownership & etc.
7. Any other requirements as deemed necessary by the Authority.
8. Net worth certificates certified by CA.

Process for Applying for Corporate Agency License

In general, national or state insurance regulatory authorities oversee these licenses. We will now describe a typical procedure that is usually adhered to.

We have laid down the process to apply for the corporate agency license for your better insight:

1. Application Submission

The application has to be presented before the authority to grant a corporate agency license in the following ways:

• The application has to be made by entities whose principal business is not the distribution of insurance products, and insurance distribution is a subsidiary activity of the company.
• The application for a corporate agency license must be made in Form A of Schedule –I.
• A fee of Rs. 10,000/- plus taxes must be paid through an Account Payee draft in favor of IRDAI payable at Hyderabad.
• The fees can also be made through electronic transfer.
• The application for granting the corporate agent license will be rejected if it does not confirm the requirements.
• The Authority may request from the applicant further information and documents.

2. Category Selection

The application has to be made under one of the categories such as corporate agent for life insurance, corporate agent for general insurance, corporate agent for health insurance, and corporate agent for composite insurance.

3. Eligibility Check

The applicant needs to check that his application falls under the specified eligibility criteria for filing a detailed informative document as per the eligibility criteria for the selected category.

4. Registration Fee

Upon receipt of communication for grant of registration from the Authority, the applicant shall pay a fee of Rs. 25,000 plus applicable taxes, within 15 days of receipt of such communication.

5. Issuance of Certificate

If the Authority is satisfied with the application, then the certificate will be issued in Form- B. The Authority would also have to send intimation to the applicant regarding the category in which the applicant has been granted registration.

What is the Basis for Rejection of a Corporate Agency License?

If the requirements of the application are not met, then the Authority will cancel the application. The application must conform to the eligibility criteria and the conditions.

What is the Validity of CoR for a Corporate Agency License?

The validity of the certificate of registration for a corporate agency license can be 3 years from the date of issuance of a License.

Fees Required for Corporate Agency License

The fee structure for a corporate agency license includes government (plus taxes) fees as well as professional charges to be paid through the account payee draft in the name or Favor of IRDAI, Hyderabad.

The fees required for obtaining a corporate agency license comprise the following necessary charges prescribed by the IRDAI.

• Government fees for processing the registration application is Rs. 10,000;
• The government registration fee is Rs. 25,000

Timeframe for Obtaining a Corporate Agency License

A timeframe of approx. 2 to 6 months is required for obtaining a corporate agency license in India.

How Enterslice will help in Securing Corporate Agency License?

Enterslice is a company that focuses on providing legal, regulatory, and compliance services specifically for businesses. If you need help securing a corporate agency license, we are available to guide you every step of the way. This is how we might help you:

1. Understand your Requirement

We will start by deeply comprehending your company and its needs for acquiring a corporate agency license. we will also assess your business model, operational procedures, and the particular regulations that apply to your industry.

2. Assist in Documentation

We will help you prepare all the required documentation for the license application. This may involve creating business plans, compiling financial statements, and strictly adhering to the regulations.

3. Application Processing

We will assist you in completing the entire application process, including filling out forms, submitting documents, and communicating with regulatory authorities on your behalf. We process the application depending on the necessary criteria defined by the IRDAI.

4. Legal Advisory and Support

We provide legal advisory and support services clarifying any objection or legal issues raised during carrying out the business operations under the corporate agency license. We are also here to offer you strategic recommendations and support to assist you in optimizing the advantages of your corporate agency license and expanding your business.