RULES exceed twenty-six per cent of paid-up equity

RULES AND REGULATIONS

REQUIREMENT OF CAPITAL

1)      Any applicant seeking to become an insurance broker under these regulations shall have a minimum paid up capital/contribution as mentioned below:

 

CATEGORY

MINIMUM CAPITAL/CONTRIBUTION (rupees)

Direct broker
 Reinsurance broker
Composite broker

fifty lakhs
two hundred lakhs
two hundred and fifty lakhs.

2)      the capital in the case of a company limited by shares and a cooperative society shall be in the form of equity shares ;

3)      the contribution of partners in the case of LLP shall only be in cash;

4)      the applicant shall exclusively carry on the business of an insurance broker as licensed under these regulations.

5)      The aggregate holdings by a foreign company, either by itself or through its subsidiary companies or its nominees, shall not exceed twenty-six per cent of paid-up equity capital of such applicant at any time. For the purposes of these regulations, the calculations of foreign direct investment shall be made in the same manner as specified for an insurer in Insurance Regulatory and Development Authority (Registration of Indian Insurance Companies) Regulations, 2000, as amended from time to time.

6)      The shares of an insurance broker held as capital shall not be pledged in any form or manner to secure credit or any other facility and shall at all times be free

 

MAINTENANCE OF MINIMUM AMOUNT OF NET WORTH:

 1) The net worth of an insurance broker shall at no time during the licence period fall below 100% of the minimum capital or contribution prescribed.

 2) In case of non-compliance of regulation(1) above, the insurance broker shall inform the Authority on the steps taken by it to restore the networth to 100% of the minimum capital or contribution prescribed.

 

DEPOSIT REQUIREMENTS:

 (1) Every insurance broker shall before the commencement of their business, deposit and keep deposited with any scheduled bank a sum equivalent to 20% of the minimum capital/contribution in fixed deposit, which shall not be released to them without the prior written permission of the Authority: Provided that the Authority may impose a separate limit of deposit, in any case not exceeding Rupees one hundred lakhs, for a person

 (2) The deposit shall have a lien with the Authority.

(3) Such deposit shall not be pledged for taking any loan or overdraft facility by the insurance broker;

 (4) Every insurance broker shall furnish to the Authority as and when called upon to do so a non-encumbrance statement from scheduled bank in which such fixed deposit is kept.

 

PROCEDURE FOR LICENSING

(1) The Authority on being satisfied that the applicant fulfills all the conditions specified for the grant of licence, shall grant a licence as prescribed in Schedule IX-Form B of these regulaitons and send an intimation thereof to the applicant mentioning the category for which the Authority has granted the licence. The licence shall be issued subject to the insurance broker adhering to the conditions and the code of conduct as specified by the Authority from time to time.

 (2) An insurance broker licensed under these regulations for a specified category may also apply for the grant of a licence by the Authority for any other category by fulfilling the requirements of these regulations. However, such application shall be made only after a completion of one year from the grant of a licence in the first instance.

 (3) In case a licence issued under regulation 5 of these regulations or issued under any other regulations which were in force prior to the notification of these regulations, is cancelled/surrendered or renewal is rejected by the Authority for the reasons specified therein, the applicant may make a fresh application for grant of licence only after lapse of one year from the effective date of such cancellation/surrender or rejection of renewal of licence, for consideration of the Authority. The Authority may consider such application on merit.

 

VALIDITY OF LICENCE.

(1) A licence once issued shall be valid for a period of three years from the date of issue, unless the same is suspended or cancelled under these regulations.

 (2) No insurance broker shall be permitted to do business without a valid and current license.

 

REJECTION OF APPLICATION.

(1) Where an application for grant of a licence under regulation 5 does not satisfy the conditions set out in regulation 8, the Authority may refuse to grant the licence: Provided that no application shall be rejected unless the applicant has been given a reasonable opportunity of being heard.

 (2) The refusal to grant a licence shall be communicated by the Authority within thirty days of such refusal to the applicant stating therein the grounds on which the application has been rejected.

 (3) Any applicant, aggrieved by the decision of the Authority, may apply within a period of thirty days from the date of receipt of such intimation, to the Chairman of the Authority for reconsideration of its decision.

 (4) The Chairman of the Authority shall consider such an application and communicate his decision thereon to the applicant in writing within forty five days of the receipt thereof.

 (5) In case the Chairman of the Authority, after reconsideration of the application made under sub-regulation (3) above, rejects the application, the applicant can make a fresh application for grant of licence only after one year from the date of final rejection. The Authority may consider such application on merit.

 

RENEWAL OF LICENCE.

(1)   The application for renewal of licence shall be submitted to the Authority by the insurance broker in Schedule IX-Form A of these regulations at least thirty days before the expiry of the licence

(2)    No insurance broker shall be allowed to do any fresh insurance business after expiry of the licence, except servicing the existing policyholders.

(3)   The Principal Officer and employees responsible for soliciting insurance business of an insurance broker before seeking a renewal of licence shall have completed at least twenty-five hours of theoretical and practical training, imparted by an institution recognized by the Authority.

(4)   The application for renewal, under sub-regulation (1) shall be dealt with in the same manner as specified under regulation 8.

(5)   The Authority may seek further information/clarification/data on the application submitted the insurance broker while processing the application.

(6)    The insurance broker shall submit such information as required under sub-regulation (5) above within 21 days of receipt of the communication from the Authority

(7)   The licence of the insurance broker, on failing to comply with sub-regulation (6) above may be suspended till such time the information required under sub-regulation (5) above is received by the Authority.

(8)    The Authority, on being satisfied that the applicant fulfills all the conditions specified for renewal of the licence, shall renew the licence in Form C for a period of three years and send intimation to that effect to the applicant.

(9)   In case a composite broker is found to have violated the provisions of the regulations in the direct category or reinsurance category of the licence, the Authority may consider renewing the licence only for the category where no major violation is observed.

(10)                        In case a Direct Broker licensed in both life and general categories is found to have violated regulations in the life or general category of the business, the Authority may consider renewing the licence only for the category where no major violation is observed.

(11)                        In case a Direct Broker licensed in both life and general categories is not doing any business in life or general category, the Authority may consider renewing the license only for the category where the broker has booked business.

 

CLAIM CONSULTANCY

 The Authority permits limited claim consultancy by insurance brokers, subject to the following conditions:

a) for claims not exceeding Rs. 10 crore provided such claim does not emanate from a policy, which has been placed by the same insurance broker or any other insurance broker.

 b) The insurance broker shall inform the Authority within 30 days of acceptance of such claims consultancy by providing details such as name of the client, place of risk, name of the insurer, name of the distribution channel, if any, amount of loss, date occurrence of loss, mandate obtained from the client for the claims consultancy;

 c) For claims exceeding Rs. 10 crores and the claims arising out of a policy placed by any other insurance broker, the insurance broker shall seek the prior approval of the Authority before acting for the client.

 d) The application for seeking approval shall accompany the details such as name of the client, place of risk, name of the insurer, name of the insurance broker through whom the policy was originally placed, the reason for not providing the claims assistance to the client by the other insurance broker, amount of loss, date occurrence of loss, mandate obtained from the client for the claims consultancy

 e) before offering the consultancy, the insurance broker shall obtain a written mandate from the client to represent the client with the insurer concerned for the claim for which consultancy has been sought by the client and offered by the insurance broker.

 f) the insurance broker may charge fee for such services as may be mutually decided between the insurance broker and the client. However, such fee shall not be expressed as a percentage of the claim.

g) the insurance broker shall, in all their dealings with such clients, be governed by the provisions of Code of Conduct as specified in Schedule I – Form H and Schedule I – Form I, as applicable, of these regulations.

 h) Any dispute between two or more insurance brokers arising out of such consultancy arrangements shall, in the first instance, be considered by the Insurance Brokers Association of India (IBAI) and thereafter the IBAI shall forward the substance of such dispute together with its recommendation to the Authority for final disposal.

 i) The Authority will review and decide the norms regarding claims consultancy from time to time.

(1) From the date of commencement of these regulations no person can function as an insurance broker unless a certificate of registration has been granted to them by the Authority under these regulations or under any other regulations which was in force.

 a) Insurance brokers including the insurance brokers registered under the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013 shall be governed by the provisions of the Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2017 from the date of notification of these regulations.

 b) The licenses issued under the provisions of the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013 shall continue to be valid till the expiry of the license provided there are no violations of any of the provisions of the Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2017 from the date of notification of the regulations.

 c) Applications for grant of license or renewal of license, received at the Authority prior to notification of these regulations shall be governed by the provisions of Insurance Regulatory and Development (Insurance Brokers) Regulations, 2013 till the final consideration / disposal of such applications.

d) Proceedings / Departmental enquiry / Departmental inspection which have been initiated against the insurance broker under the provisions of Insurance Regulatory and Development (Insurance Brokers) Regulations, 2013 shall be governed by the provisions of respective regulations till their final disposal.

(2) Any disputes arising between an insurance broker and an insurer or any other person either in the course of their engagement as an insurance broker or otherwise may be referred to the Authority by the person so affected; and on receipt of the complaint or representation, the Authority may examine the complaint and if found necessary proceed to conduct an enquiry or an inspection or an investigation in terms of these regulations.