How to become an Insurance Broker in India? All You Need to Know!

Insurance broking is one of the few rewarding career options across the world. It allows you to build a charming career, gain enough monetary benefits, able to spend quality time with your family, etc. Working as an insurance broker offers unlimited flexibility in your work schedule, boundless opportunities to create a huge difference in other person lives also. If you go in search of businesses that are experiencing substantial growth over a long period of time in the country, then the insurance broking business in India is definitely a strong candidate. The opportunity to score unlimited profit margin and comparatively risk-free business practice is attracting more and more people into the insurance broking business in India.

What is an insurance brokerage firm?

A firm or a company that works as an insurance advisor; not bound to any particular insurer products or services but offers a variety of insurance products according to the client’s requirements. If you want to buy health insurance or insurance coverage for your car, you can consult with an insurance broker and decide the best possible insurance solution that matches your necessities

What work does an insurance broker do?

Insurance brokers sell insurance products to their customers. Their products and service vertical doesn’t limit to one insurer but to multiple insurers. They will have enough knowledge about different policies that match your needs and will help you to buy the best available pick. They also help customer to handle their claims and make sure each and every aspect are considered and dealt intact.

What are the types of Insurance Broking Companies in India?

The major types of insurance broking companies are:-

Direct insurance brokers

They assist people to buy policies from the lot and earn their commission for a living. They can be further divided as Direct Life Insurance Broker, Direct Non-Life Insurance Broker, and Direct Life and Non-Life Insurance

Reinsurance Broker

A broker who purchases reinsurance for a company by negotiating rates.·        

Composite Insurance Broker

A broker who has a valid license, negotiating rates and purchases the best policy for the client.

Why are insurance brokers so special?

Insurance brokers are majorly independent. They don’t have an agreement with particular insurers. They represent insurance buyers and take forward the applications to insurers on behalf of their clients. In short, they are not appointed by insurers. Instead, they educate the clients about several insurance products from different insurance companies and help them choose the best among them.

But there are many people wondering, ‘Insurance Agents and Insurance Brokers – Are they same? Knowing the difference between an agents and brokers can help the insurance policy holder to use their services effectively.

So if you are interested in how to become one, let’s check out the procedures to become an insurance broker in India.

What are the important documents required to become an insurance broker?

• Filled and signed application form
• Declaration form signed by at least two directors or partners
• Memorandum of Association of the company
• IT returns for the last 3 years of individual shareholders
• Net worth certificates and affidavit showing the source of the invested funds of individual shareholders
• Article of Association of the company
• Demand draft against the license fee
• Detailed statement verified and certified by the auditor – Shareholding pattern of the company, the full names of the company shareholders, total number of shares held, exact share certificate numbers, and folio numbers

• Audited balance sheet of the company
• Original proof of your fixed deposit amount (with any scheduled bank)
• Annual reports of the shareholder companies (for last 3 years)
• Board resolution of the shareholder company regarding the investment in the said company.
• Auditors certificate regarding NBFC status of the shareholding company
• If share holding company is an NBFC (Non-banking finance company), then NDA is required from RBI NA
• Detailed CV and attested testimonials of the Principal Officer
• Training certificate of the Principal Officer
• Detailed CV and testimonials of the key managerial persons.
• Details of the persons qualified and trained along-with their testimonials and the training certificates.
• List of persons responsible for procuring insurance business and their testimonials.
• Necessary proof of infrastructure, office space, trained employees, etc.
• List of all prospective clients with expected premium
• Business and income projection for the next 3 years with class wise break-up.

What else you need to know about becoming an insurance broker in India?

• The declaration part of the application format has to be signed by the two directors
• Remit the requisite fee as per the category of insurance broker, as prescribed under Schedule II of IRDA (Insurance Brokers) Regulations, 2002.
• Printed copy of Memorandum and Articles of Association issued by Registrar of Companies is required.
• The main objects of the Memorandum and Articles of Association should be as per regulation 9(2) (H) of the IRDA’s (Insurance Brokers) Regulations, 2002.
• One Principal Officer is a must in a broking company

• A certificate that is certified by the auditors, stating the names of share holders, shares held, its percentage, share certificate numbers, folio numbers etc
• It should also have the details of its authorized and paid up capitol position
• A certificate is required from the auditors showing the current deployment of its resources
• A bank certificate showing the current balance in its account
• The Principal Officer has to submit an undertaking that none of the directors or the employees of the company are holding any directorships or employment in or represent any other insurance related entity
• The Director and the Principal Officer has to submit an undertaking that the broking premises including the branch premises will be used solely for running the broking business only

Source: The above procedures and documentation lists are taken from the official website of Insurance Broker Association India.

Why does an insurance brokerage firm need an insurance broker license?

Insurance brokers who have license show trust and authenticity in what they offer. The products and services offered by a licensed insurance broker will have reliable plans and coverage options.

How long is an Insurance Broker License valid for?

The insurance broker license validity period is 3 years. You have to renew the same within 30 days of the expiry date else you will have to wait for another year for its renewal.

What are the eligibility criteria for insurance brokers training?

• Must hold a bachelor’s/master’s degree or any equivalent qualification like being a fellow or an associate of the Insurance Institute of India/Insurance Institute of Risk Management/Insurance Brokers Association of India.
• Engage in any insurance consultancy or reinsurance activity for 7 years from the date before application is submitted. Otherwise, being a principal underwriter or manager in any nationalized company of India.
• Should have undergone adequate hours of theoretical and practical training recognized by the Insurance Regulatory Authority of India.
• Once training is over, get passed the exam conducted by the National Insurance Academy.
• Retain a minimum capital as per regulations provided by the authority.

After the necessary conditions are satisfied, license can be issued. It can be valid for a period of 3 years from the issued date, unless the same is suspended in accordance with the regulations. A broker may apply for license renewal within 30 days before the license gets expired. Brokers carrying brochures and loads of policy documents to meet people are not a situation anymore!

But there’s a catch!

If you want to stand out in the modern insurance broking business, you must own one of the best insurance broking software. It must help you in organizing and tracking each and every stages of a policy, helps you to instantly create your own professional RFQs and quote comparison, draft invoice and reconciliation etc.

It’s said that this industry provides huge earning potential with the help of an insurance broking software. No one will stop your desire builds the income!

So, how much do you desire?