An Insurance Broker is a business entity that solicits in insurance services of other insurance companies. It’s an intermediary, acting on behalf of the customers and advising them so that they can make the right choice. In this article, you’ll all the facts about the insurance broker license – the permission to become a broker of insurance policies in India.
There are three types of Insurance Brokers
Insurance broker licenses vary depending upon the types of Insurance brokers. They are as follows:
- Direct Insurance Brokers
- Reinsurance Brokers
- Composite Insurance Brokers
Direct Insurance Brokers are companies that act as a direct intermediary between insurer(insurance companies) and the insured (customers). Their job is to leverage their knowledge about insurance policies and insurance market to:
- Advise the customers about insurance policies
- Interpret the policies in a simple manner to the customers.
- Representing the insurance company.
Reinsurance Brokers are companies that act as an intermediary between an insurance company and an reinsurance company. In this instance, the insurance company acts as a company who avails the services of a reinsurance company.
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What is a reinsurance company?
It’s a service provider that facilitates insurance companies with risk management services for the risk associated with insurance policies. In simple terms, reinsurance brokers are B2B insurance brokers.
Composite Insurance Brokers are companies that provide both direct and reinsurance brokering services.
You must meet the eligibility criteria to obtain the Insurance Broker License
To obtain the Insurance Broker License, you must adhere to the all the eligibility criteria. They are as follows:
- The applicant of the license has to be a company or an LLP.
- Depending upon the category of insurance broker the applicant is, he has to adhere to certain financial criteria:
- Paid up capital contributions
- Direct brokers, the paid up capital contribution requirement is INR 75 Lakhs.
- Reinsurance brokers, the paid up capital contribution requirement is INR 4 Crores.
- Paid up capital contributions
- Composite brokers, the paid up capital contribution requirement is INR 5 Crores.
- Minimum Net worth requirements:
- Direct brokers, the net worth requirement is INR 50 Lakhs.
- Reinsurance Brokers, the net worth requirement is 50 percent of paid up capital contribution.
- Composite brokers, the net worth requirement is 50 percent of paid up capital contribution.
- Deposit requirements
- Direct brokers, the deposit requirement is INR 10 Lakhs.
- Reinsurance brokers, the deposit requirement is 10% of paid up capital contribution
- Composite brokers, the deposit requirement is INR 10 percent of paid up capital contribution.
Insurance Brokers have to be trained first
Meeting the eligibility criteria is not enough. Every insurance broker’s principle officer – the one who would take the responsibility of the business objective – must go through training by an IRDA accredited institute. If principle officer has to complete the course and clear the subsequent exam to be considered suitable for the insurance broker license.
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To become an Insurance broker, you must first become eligible for it. In this blog, we have covered nearly everything that you need to know about insurance broker license.
If you have any more queries pertaining to this license, contact Registrationwala.
Here is everything that you need to know about Insurance Broker License. For further details, contact Registrationwala.