Business

Eligibility Criteria for Insurance Broker License in India

The Insurance Broker License is a registration certificate issued by the IRDA to establish a firm or a business entity that provides insurance intermediation services to customers. The general public is now more aware of insurance policies. To cater to them, applicants for the insurance broker license are rising. However, one must meet the eligibility criteria before becoming an insurance broker in India. Therefore, this article explains the conditions you must meet to become an Insurance broker.

These days, insurance is on the mind of the general public. The recent pandemic has made them aware of the futility of life. Thus, most are no longer apprehensive about getting insurance policies to secure their family’s future. After witnessing this rise, entrepreneurs are finally heeding to the opportunities within the insurance domain. As a result, we observe a sharp increase in insurance brokers in India. However, not everyone meets the eligibility for the insurance broker license.

But what are those conditions and, how can you meet them? Let’s discuss.

Which entities have permission to apply for an Insurance broker license?

The following entities are allowed to apply for the Insurance Broker License in India:

  1. Companies registered under the Companies Act, 2013
  2. Societies registered under the Society’s Act
  3. Limited Liability Partnership incorporated under the LLP Act, 2008

To gain eligibility as a company, you must incorporate a Private Limited Company using the following steps:

  1. First, you must pick a suitable name for your business and make sure that it accentuates the insurance services
  2. Then, draft an MOA and specify your business objectives.
  3. Similarly, draft an AOA to state the rules and regulations for your company.
  4. Furnish the requisite documents and apply online for company incorporation.
  5. Finally, get the company incorporation certificate.

To gain eligibility as a Society, incorporated one under the Society’s act using the following steps:

  1. Draft the by-laws of your Society
  2. Get the consent of your Society’s members
  3. Apply online for Society registration
  4. After the assessment, you will obtain a Society Registration certificate.

Meeting the eligibility criteria as an LLPestablish your Limited Liability Partnership firm using the steps below:

  1. Get DPIN for your partners.
  2. Draft the LLP agreement.
  3. Apply online for LLP registration.
  4. Get the LLP incorporation certificate.

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Net worth criteria for obtaining the Insurance Broker License

It is not enough to incorporate an entity or a society. To obtain the COR (Certificate of Registration) from IRDA, you must also adhere to the financial criteria.

Requirement for the direct insurance brokers

Direct Insurance Brokers are insurance entities that act as intermediaries between an insurer and the insured. Insurer refers to an insurance company, and ‘insured’ is the customer seeking the insurance policy. The financial requirements that a direct insurance broker must meet are as follows:

  1. Paid Up capital should be at least INR 75 lakhs.
  2. Networth should be at least INR 50 lakhs.
  3. The deposit requirement is INR 10 Lakhs.

Requirement for the reinsurance brokers

Reinsurance Brokers are insurance entities that act as intermediaries between an insurer and the reinsurer. Insurer refers to an insurance company, and ‘reinsurer’ is the reinsurance company that provides risk management services. The financial requirements that a direct insurance broker must meet are as follows:

  1. Paid Up capital should be at least INR 4 Crores.
  2. Networth should be at least 50 percent of the paid-up capital.
  3. The Deposit requirement should be at least 10 percent of the paid-up capital.

Requirement for the composite insurance brokers

Composite Insurance Brokers are insurance entities that provide both direct and reinsurance brokering services.

  1. Paid Up capital should be at least INR 5 Crores.
  2. Networth should be at least 50 percent of the paid-up capital.
  3. The Deposit requirement should be at least 10 percent of the paid-up capital.

Other requirements for an Insurance Broker license

There are other requirements that an insurance broker must fulfill, and they are as follows:

  1. The entities must meet the Fit and Proper Criteria.
  2. Every applicant entity must have a principal officer with the requisite qualification.

As you can see, it is not enough for you to possess the correct entity. You must only apply for the insurance broker license if your co-directors are of sound mind. In addition to having a sound mind, the directors should also possess:

  1. Integrity,
  2. Qualification, and
  3. A desire to render optimal insurance brokering services to the people.

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Conclusion

It is not easy to perform the task of an Insurance Broker. Thus, the IRDA has set forth several roadblocks like the eligibility criteria to deter the undeserving from applying for the Insurance Broker License. Do you think you deserve this certificate? If so, contact our experts.

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