Insurance Broker Compliance

In today’s insurance business world, reporting the information with the authorities have become an essential part of an organisation. The requirement of compliance increases as there are more risks involved in the insurance business. Sharing the information offers better transparency and accountability in the organisation.

This guide is applicable to insurance brokers who want to keep track of records.

  They may prepare the following for every financial year:

1.  A balance sheet or affairs statement at the end of each accounting period.
2.  A profit and loss of each accounting period
3.  A cash or fund flow statement – direct method
4.  Additional statements on broking business as required by the authority.

As per regulations, the accounts can be maintained on accrual basis and the financial period shall be 12 months. For instance, the financial year of an insurance business shall start on the first day of April and ends on the 31st day of March of the following year.

  • They shall submit the following to the authority; a copy of the audited financial statements as mentioned in regulations and the auditor’s report thereon. This should be submitted within 30 days of annual general meeting or before 30th of September every year. Along with the above-said documents, the auditors’ remarks or observations with suitable explanations shall be attached to files sent to the authority.
  • They can rectify any faults made out in the auditor’s report and inform the authority correspondingly. This can be done within 90 days from the date of submission of the auditor’s report.
  • They can maintain all the books of account, statement, and documents at their head office or other branch office which is designated to them. These documents can be available on all working days to officers of the authority for inspection.
  • All these above-said documents which is maintained a broker shall be retained for a period of 7 years at least from the end of the year to which they can relate. Nevertheless, in the cases where claims are reported and courts decision is pending, the documents should be maintained till the court have done with the cases. This is a bit different for Reinsurance brokers – they have to maintain the documents till its natural expiry.
  • They shall provide their financial statements including the details of payments received from insurers, insurer’s group companies and also from any group companies and/or associates and/or related parties from any insurer.
  • Auditor shall submit a certificate confirming the compliance regulations in the given format in Schedule II – Form UA (Refer the official IRDA site).
  •  Brokers shall submit the details of statutory auditors’ along with the audited accounts according to the schedule II – Form V of these regulations. These statutory auditors can be assigned for a continuous duration of up to 5 years at maximum.
  • Just in case the remuneration and other payments made to a broker exceeds the specified limits, insurer can file with the authority a certificate as given in schedule II – Form W; It has to be signed by the CEO and CFO of an insurer. A similar certificate from the CFO and Principal Officer of the broker certifying the same shall be filed with the authority in the format given in Schedule II- Form W.
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