Insurance License

Requirements for Registering as a Corporate Agent

A corporate agent is usually a company or an organisation that represents the interest of an insurance provider. As a result, corporate agency operate in the insurance company’s best interests. A corporate agent must adhere to the guidelines and comply with a number of rules. These agents sell the insurance company’s policies in addition to representing the interests of the insurer. A corporate agent would be required to obtain a corporate agency licence in order to work for the insurance business. A corporate agency licence may be obtained by businesses in addition to banks. A bancassurance arrangement, or partnership, is when a bank acts as the corporate agent of an insurance business. Based on their client’s understanding and requirements, banks offer insurance policies to their customers.

Corporate Agent

Any entity or person holding a valid certificate of registration issued by the authority for the purpose of soliciting and servicing insurance business for any of the specified categories of life, general, and health is referred to as a “corporate agent” under regulation 2(b) of the IRDAI (Registration of Corporate Agents) Regulations, 2015.

The registration of corporate insurance agents is mandatory under the IRDAI (Insurance Regulatory and Development Authority of India) Regulations which was implemented in 2015. Since the implementation of the regulation on April 2016, numerous agents have registered in accordance with the aforementioned regulation.

Corporate agencies are companies that take part in soliciting, producing or servicing the insurance business of life insurers, general insurers, and health insurers. They can be cooperative societies, LLPs (Limited Liability Partnerships), NGOs, rural banks or Micro Finance Lending Organizations.

Types of Corporate Agents in India

There are four types of corporate agents in India.

1. Corporate Agents for Life Insurance.
2. Corporate Agents for General Insurance.
3. Corporate Agent for Health Insurance.
4. Corporate Agent Composite Insurance.

According to new rules established by the Insurance Regulatory and Development Authority of India, a corporate insurance agent for life, non-life, and health insurance may have agreements with a maximum of three businesses for each of these purposes.

A “Composite Insurance Agent” is someone who has been appointed as an insurance agent by two or more insurers with the restriction that they only act as an insurance agent for one life insurer, one health insurer, one life insurer, and each of the mono-line insurers.

Any modification to the agreement with the insurance company may only be made with the authority’s prior permission and appropriate arrangement in place to support existing policyholders.

The need for a corporate agent licence

• Mainly to ensure that the corporate agent acts on behalf of the insurance company.
• To solicit products on behalf of the insurance company.
• To act in the life insurance, non-life insurance, and general insurance industry’s best interests. 
• This licence is necessary to ensure that the insurance industry is sufficiently regulated.

Requirements to become a Corporate Agent 

The requirements that the corporate agent must satisfy in order to obtain registration are as follows:

1. The applicant should be from any of the following entities:
   Accompany registered under the Companies Act, 2013
   • A limited Liability partnership registered under the LLP Act.
   • A cooperative society that has a Co-operative Societies Act registration.
   • A regional rural bank incorporated under section 3 of the Regional Rural Banks Act.
   • A Non-Profit Organisation or a Micro Lending Finance Organisation regulated by the Co-operative Societies Act.
2. The applicant must possess the infrastructure required to start their activities. It includes:
   
   • Adequately trained professionals
   • Sufficient office space
   • Adequate equipment
3. The principal officer of the applicant entity must be a graduate and have completed at least 50 hours of training at a facility recognised by IRDA.
4. Any code of conduct listed in the regulations should not have been violated by the applicant.
5. The relevant authorities should have declared the applicant “Fit and Proper”.
6. The applicant should not be disqualified under the law in force.
7. If the applicant also runs a business that is unrelated to insurance, there must be no financial connection between that business and the corporate agency business.

Capital Requirements

• A candidate with an insurance distribution business must have Rs. 50 lakhs in net worth and equity capital or contribution. The organisation is required to maintain the net worth criteria continuously.
• The total holding of equity shares or contributions made by foreign investment will be prescribed by the central government for applicants in the insurance distribution sector.

Conditions required for a corporate agent licence

The following requirements for granting a corporate agency licence:

• Corporate agents are required to adhere to the insurance industry’s code of conduct. 
• They are restricted to soliciting and servicing the insurance business.
• Corporate agencies are required to abide by the given act, regulations, and rules provided by the authorities.
• Any significant changes or false or misleading information for previously provided data should be reported to the authority by the applicant.
• These agents must take the necessary action for the redressal of grievances within 14 days.
• A reasonable quantity of insurance policies, according to the available resources, must be solicited and procured by the corporate agent.
• The corporate agency is responsible for maintaining the company’s records. These include person-specific information about the various policies as well as policy details. The corporate agency will put in place adequate systems to guarantee that records are maintained.
• The corporate agent is not permitted to engage in multi-level marketing for the purpose of promoting insurance-related goods.
• The corporate agency is required to maintain particular books of accounts for their company.
• The corporate agency is responsible for ensuring that there are no conflicts of interest during the solicitation process.

Necessary Documents in India to Register a Corporate Agent

Along with the corporate licence registration application, the following documents are required:

1. Certificate of incorporation or the Limited Liability Partnership or Cooperative Society Companies in accordance with their individual administrative acts.
2. Information about the proposed or existing branch offices.
3. Details about the applicant organization’s chief executive officer.
4. Information about the partners and directors of the applicant organisation.
5. An organisational chart of the applicant organisation that details the functional duties of each department.
6. Net worth certificate of the applicant, which is certified by a chartered accountant.
7. Receipt of the application fee
8. Fit and proper declaration criteria.

Procedure

The applicant is required to pay a fee of Rs.25000 plus any relevant taxes within 15 days after the receipt of communication from the registration granting authority. If the authority is satisfied with the application, the certificate in Form-B will be issued. Additionally, the applicant would need to receive notification from the authority about the category in which registration has been approved. If particular criteria connected to the regulation are satisfied, an applicant may submit an application for another category. This application must be made only after completing the 1 year of the corporate agency licence.

Licence Validity

A corporate agent’s registration certificate is valid for three years from the date of its issue. However, if the corporate agent registration is not revoked or terminated due to a violation of the authority’s rules, this validity may be compromised before the three years have ended.

Conclusion 

From this blog,  we can understand the concept of corporate agents and the requirement for registering as a corporate agent. The regulator has taken another step to improve insurance penetration with the rise in corporate agents and tie-ups. While taking this action will give customers more options for insurers and products, it is also anticipated to drive innovation in product development, improved usage of technology, and data analytics that will result in a seamless customer experience, thereby increasing the level of financial protection for corporate agent customers.

Read our Article: Regulations for Corporate Agents under IRDAI