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What are Insurance Brokers License conditions?

Prabhat Nigam

| Updated: Mar 15, 2022 | Category: Insurance License

Insurance Brokers License conditions

Regulation 13 of the Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2018 lays down the conditions for the insurance brokers license conditions.

Insurance brokers license conditions

The registrations granted or renewal of registration granted to any of the insurance brokers shall be subject to the following condition:

  • Exclusive business of Insurance broking

The insurance broker who is registered under these regulations shall be exclusively carrying on the business of an insurance broker which is permitted under these regulations.

  • Act in conformity with the provisions, rules etc. of IRDA Act, 1999

An insurance broker who wants to be registered under the Insurance Regulatory and Development Authority needs to be in compliance in all the provisions of the Insurance Regulatory and Development Authority Act, 1999, the rules and regulations, circulars, guidelines and other instructions issued by the authority from time to time.

  • Inform the authority in writing any false and misleading information

The insurance broker needs to inform the IRDA in writing with immediate effect about any of the information submitted by the broker previously with the IRDA has been found to be false or misleading with respect to any material particular or if any material change has occurred in any of the information already suffered by the broker.

  • Redressal of grievance by the Insurance Broker

It is encumbent upon the insurance broker to take adequate steps for the redressal of grievances of its clients. The redressal must be done by the insurance broker within a period of 14 days from the date of receipt of such complaint. It is also the responsibility of the insurance broker to keep the IRDA informed about the number, nature and other details received from the client and submit the same in the form and manner prescribed by the authority from time to time.

  • Solicitation and procurement of insurance policies

It is mandatory on part of the insurance broker to solicit and procure a reasonable number of insurance policies which is commensurate with the number of the Broker Qualified Persons and resources at their disposal.

  • Maintenance of records capturing policy-wise details

It is also mandated on the insurance broker to maintain the records in the format prescribed by the authority which shall capture all the policy wise details and every policy solicited by the Insurance Broker is tagged to the broker qualified person or authorised person wherever applicable.

  • Non-engagement in Multi level marketing

The insurance broker has been restrained by the provisions from undertaking multi-level marketing for solicitation and procurement of insurance products.

  • Compliance with the Code of Conduct

The Insurance broker needs to be in compliance of the Code of Conduct which has been prescribed by the authority while undertaking the insurance broking business

  • Maintenance of Books of Accounts

The Insurance Broker needs to maintain the books of accounts in the manner that has been prescribed by the IRDA.

Considerations before granting of a certificate of Registration

Apart from the above mentioned Insurance Broker License conditions, the IRDA also takes into account the following considerations before granting a certificate of registration:

  1. Whether the applicant suffers from any kind of disqualification under sub-section (5) of section 42 of the IRDA Act, 1999[1].
  2. Whether the applicant possess the proper infrastructure for carrying on the business of insurance broking such as adequate office space, IT infrastructure, equipment, trained manpower etc.
  3. Whether the applicant has employed a minimum of two broker qualified persons having the necessary qualifications mentioned under schedule I
  4. Whether any person who has been directly or indirectly connected with the applicant applied for registration or license in the past but has bad been refused by the authority.
  5. Whether the applicant fulfils all the capital requirements, net worth requirements and deposit requirements etc provided under different schedules
  6. Whether the principal officer of the applicant has the required qualification, undergone adequate training, passed the examination, possess necessary certification and other requirements as specified under Schedule I
  7. Whether the Key Management Personnel/ Partners/ Promoters/ Directors/ Principal Officer are Fit and Proper based on the statement in Schedule I
  8. Whether the code of conduct has been violated by Principal officer/ or any other official of the Insurance Broker provided in schedule I
  9. Whether in the opinion of the authority, the Principal Officer of the applicant is suitable for the job keeping in view his experience in the insurance sector
  10. Whether the financial position of the promoters/ partners/ investors/ foreign investors is sound enough or not to make investment in the applicant entity
  11. Whether the broker qualified person fulfil all the necessary requirements mentioned under Schedule I
  12. Whether the Authority has rejected or the applicant himself has withdrawn the application in the preceding financial year from the date of application
  13. Whether the Indian promoter or foreign investor has made an exit from the existing venture during the two preceding financial years from the date of application
  14. Whether the issue of certificate of registration is in the benefit of the shareholders

Conclusion

These Insurance Broker License Conditions have been developed in a certain manner so that interests of all the stakeholders associated with the Insurance Broker and especially the customers are not harmed in any manner. These Insurance Broker License Conditions are introduced so as to ensure that an applicant has minimum standards of fulfilling the necessary duties of an insurance broker.

Read our Article:How to get an Insurance Broker License in India?

Prabhat Nigam

Prabhat has done his BA LLB (Hons) and has been writing research papers since his law school days. His interest in content writing made him pursue a career in legal research and content writing. His core areas of interest are indirect taxes, finance and real estate.

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