Insurance Broker Regulations


Brokers are agents that connect prospective customers with insurance companies. For insurance and reinsurance business to smoothly function properly, there are requirements to follow rules and procedures under insurance brokering licensing.

Insurance Regulatory and Development Authority (IRDAI)

The primary regulatory authority for the Insurance Broker License is the Insurance Regulatory and Development authority of India (#IRDAI). The Insurance Act 1938 and the Insurance Regulatory and Development Act 1999 are the regulations behind Insurance law.

Types of Insurance Brokers

1. Direct brokers
2. Re-insurance Broker
3. Composite broker

Eligibility criteria for Insurance Broker License

Deposit Requirements
Every insurer (applicant) before the commencement of the insurance broker business must ensure that the deposit has been maintained with the scheduled bank. The sum which has to be deposited is as follows:

10 Lakh Rupees for a Direct Broker; and 10% of the minimum capital/ contribution is required for re-insurance / composite broker. Fixed deposit shall not be released to them without the prior written permission of the Authority.
For any other business willing to be an Insurance broker, a fee of 100 lakhs has to be paid to the authority.

Capital requirements
• Direct Broker- 75 Lakhs.
• Re-insurance Broker- 4 Crore.
• Composite Broker-5 Crore.

Net Worth Requirements
• 50 lakh Rupees for a direct broker and 50% of the minimum capital requirements or contribution or equivalent for a re-insurance broker and composite broker.

Documents required for Insurance Broker License

• Submission of relevant information as required in the Schedule I – Form B.
• Copy of the MOA and AOA
• Training for the employees starting an insurance broker business
• Schedule-I Form F should have the relevant data of the principal officer.
• Fit and Proper certification, which is required as per Schedule-I Form G.
• Declaration submitted by a key management executive, principal officer, director of the company that they are not having any form of disqualification under the Act.
• Details of Directors/ Partners, Promoter and Key Management Personnel are to be provided in the Form.
• Schedule I- Form F- List of qualified persons responsible for managing and procuring brokerage business along with their qualifications.
• Details of statutory auditors and Principal Bankers along with the Bank Account Number of the applicant.

Procedure for Applying for an Insurance Broker License

• The application for an #InsuranceBroker License must be made in FORM B- Schedule I of the regulations.
• The application must be submitted with documents mentioned in FORM-C Schedule I of the regulations.
• For granting the certificate of registration, an application must be submitted along with the fees specified in FORM D- Schedule I of the Insurance Regulations. The fees that has to be paid for application for an insurance broker is as follows:
Direct broker Rs.25,000.
Re-insurance broker Rs.50,000.
Composite broker Rs.75,000.

• If the authority feels that all the requisite information complies with the Insurance broker license, then an in-principal approval would be provided to the applicant for complying with the requirements related to the certificate of registration.
• The authority will grant the certificate if the applicant has complied with the laws & regulations.
• An application for starting an insurance business can be rejected if the authority feels that the applicant has not fulfilled the necessary requirements.

License renewal

A certificate granted by the IRDAI would be valid for three years from the date of issue. Applications for renewing an insurance broker license must be made to the relevant authority 30 days before the expiry of the license. The application must be made in FORM K of Schedule –I of the regulations.