Know all Insurance Broker Compliances In the insurance business world, reporting the information with the regulatory authorities have become a crucial part of an organisation. An Insurance business incorporated in India must fulfill a specific set of compliance, filings, and returns as specified under the provisions of various corporate and tax laws. Here compliance means following a set of rules and regulations/guidelines applicable to the entity. Every entity is governed under law(s) and order, and such entity needs to follow the rule and regulations prescribed by it. This applies to insurance brokers as well, where they need to meet various compliances as specified by Insurance Regulatory and Development Authority of India (IRDAI). Who are Insurance Brokers? Insurance Brokers act on behalf of the customer and are licensed to give them policies from any insurance company. They may provide expert advice on the insurance policies suitable to their customer and are paid a brokerage by the company whose policy such customer finally chooses. The insurance brokers can be best understood by the points mentioned below: Insurance broker specialises in insurance and risk management. They act on behalf of their clients & provide advice in the interests of their clients. They assist the customer in identifying individual and/or business risks to help them decide what to insure, and the manner to manage those risks in other ways. Insurance brokers deliver technical advice that can be very useful, especially when the need arises to make a claim. Various Insurance Broker Compliances General Compliances- An Insurance Broker must- act exclusively to perform the business of an insurance broker as allowed under IRDAI (Insurance Brokers) Regulations; comply with the provisions of the Insurance Regulatory and Development Authority Act, 1999 and the Regulations, guidelines, circulars and any other instructions issued thereunder by the Authority; inform the Authority in writing, in case any information or particulars that was submitted to the Authority by them are found to be false/misleading in respect of any material particular or in case there is any material change in the information submitted; take steps for grievance redressal of its clients within 14 days of receipt of such complaint and also update the Authority about the number, nature and other particulars of the complaints received; solicit and procure reasonable insurance policies commensurate with their resources and the total number of Broker Qualified Persons they employ; keep records as per the format specified by the Authority which captures policy-wise details wherein every policy solicited by Insurance Broker is tagged to the broker qualified person or other authorised persons, wherever applicable. ensure compliance with the Code of Conduct applicable to it; maintain books of accounts as provided under IRDAI (Insurance Brokers) Regulations. Board approved policy- Every Insurance broker is required to have in place a Board approved policy on how the insurance policies are solicited. The Board approved Policy, amongst others, must include the approach which should be followed by the Insurance broker in having multiple tie-ups, mode of solicitation, type of products sold, mechanism on grievance redressal, reporting requirements and any other item with respect to different business segments. The Board of the Insurance Broker must review the same once in three years. Internal control and system- Every insurance broker is required to ensure that there is a proper system of internal audit in place and that their internal controls & systems are fit for the size, nature and complexity of its business. It is mandatory in case of reinsurance and composite brokers that the insurance broker must have internal audit systems & designate a compliance officer. Maintenance of books of account, records, etc- Insurance brokers shall prepare for every financial year the following things– Balance sheet or the statement of affairs as at the end of each accounting period; Profit and loss account for that period; Statement of cash/fund flow (direct method); Additional statements on insurance broking business as required by the Authority. Insurance brokers shall submit, a copy of the audited financial statements along with the report of the auditor thereon within 30 days of holding of the AGM or before September 30th to the Authority every year, whichever is earlier, along with the remarks/observations of the auditors, if any, on the business conduct, state of accounts, etc., and a suitable explanation on the observations will be appended to such accounts filed with the Authority. Insurance brokers must take steps to rectify any deficiencies, made out in the auditor’s report and inform the Authority within 90 days from the date of the Auditor’s report. All the books of account, statements etc. must be maintained at the insurance broker head office or such other branch office as may be designated by them and notified to the Authority. It should be available on all working days to officers of the Authority, authorised in this behalf by it for inspection. All books, necessary papers, statements, contract notes etc., maintained by the insurance broker should be retained for a period of minimum 7 years from the end of the year to which they relate. However, the necessary papers relating to the cases where claims are reported and where the decision is pending for a decision from courts, such necessary papers should be maintained till the disposal of the cases by the court. For reinsurance brokers, they are required to maintain all other necessary papers till its natural expiry. There will be a note to their financial statements specifying the details of the incomes obtained from insurers & insurer's group companies, insurer-wise, by the insurance broker and also the payments details obtained by the group companies/associates/related parties of the insurance broker from any insurer and the details thereof. A certificate shall also be submitted by the auditor confirming the these regulations compliance in the format given in Schedule II – Form UA; Every insurance broker must submit the details of statutory auditors engaged by them to the Authority along with the audited accounts as per Schedule II – Form V. The statutory auditors of the insurance broker would be appointed for a maximum duration of up to 5 years (continuous). Filing of Returns- Every insurance broker is required to furnish the following certificates to the authority duly certified by the auditor before 31st October and 30th April each year- A certificate affirming that the insurance broker is maintaining required capital, the insurance broker is not doing any other business other than the insurance broking business and also maintains the required net worth as needed under regulations 19 and 22; A certificate affirming that the insurance broker maintains a deposit in compliance of regulation 23; A certificate declaring that a Professional Indemnity Policy is in force in compliance of regulation 24; A certificate affirming that the insurance broker has obtained the remuneration according to the limits prescribed in the regulation 26; A certificate to the effect, in case of a reinsurance broker or a composite broker, that the insurance broker complies with provisions of regulation 33 and maintains a separate Insurance Bank Account and the monies lying in such account are not used for any other purposes apart from as specified in the regulations. A certificate in case of a reinsurance broker or composite broker on the remuneration amount or fees earned during the period & any transfers made to any other account. The insurance brokers must also file periodical returns, within the time specified, in accordance with the formats/ returns stipulated under Authority’s Business Analytical Project. Penal action- If insurance brokers fail to comply with this regulation without sufficient reason beyond 15 days, then penal action will be attracted. Further, any false or wrong certification or concealment of facts in the certificates submitted to Authority would attract penal action. How does Enterslice help with Insurance Broker Compliances? We assist insurance brokers to be compliant with all rules, regulations, guidelines related to IRDAI. We monitor & track the status of the application on behalf of the client. We also offer post engagement services under Insurance Broker Compliance. We offer Insurance Broker consultancy services. 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