NOTE ON INCORPORATION OF INSURANCE BROKING COMPANY
Step 1: Name Reservation
The name of the proposed company shall include the words, ‘Insurance Broker’ or ‘Insurance Brokers’ or ‘Insurance Broking’.
As per requirement of Ministry of Corporate Affairs, to use the word “Insurance”, prior no-objection certificate shall be obtained from IRDAI. The following documents need to be submitted to IRDAI to obtain NOC:
- Covering letter in which it should be mentioned the purpose of incorporation.
- Self-attested copies of PAN Card and Aadhaar Card of proposed shareholders and directors of the proposed company.
Note: Validity Period of NOC: 6 Months from the date of issuance of the certificate.
Step 2: Incorporation of Company
Important points to be kept in mind:
- Minimum Paid-up Capital: Rs. 75,00,000/- (Rupees Seventy Five Lakhs only)
- Maximum permissible limit for the foreign direct investment (FDI) – 26% of the total paid up capital of the broking entity.
- The main object of the applicant is “To act as a Direct Broker under the IRDA (Insurance Brokers) Regulations, 2018 as amended from time to time”.
- The AoA of the entity should not provide for (1) issuance of shares of any type other than equity and/or with differential voting rights & (2) allotment of shares in a consideration other than cash.
A separate checklist on information/documents required for incorporation of Company is attached. You are requested to provide information as stated.
Step 3: Obtaining Insurance Broker License
There are three categories of direct insurance broker which are-
- Direct Broker (Life),
- Direct Broker (General),
- Direct Broker (Life & General)
The applicant can only register in one category.
The Company shall not commence its business operations unless license is granted by IRDAI.
Pre-requisites:
- Paid-up Capital of Rs. 75,00,000/-
- Net Worth: The broker should maintain the net worth of Rs. 50,00,000/-
- Every direct insurance broker shall keep deposit of Rs.10 lakhs with any scheduled bank and the deposit shall have a lien with the IRDAI
- Principal Officer: An officer in an executive role to carry out the functions of an insurance broker and who shall be the chief executive officer or a whole – time director or managing director.
A Principal Officer shall be person who possesses the educational qualifications as stipulated, undergone training and passed the examination conducted by National Insurance Academy, Pune with 50 per cent marks.
- Broker Qualified Person: an individual who is an employee or director of the insurance broker engaged in solicitation and procurement of insurance business and who has undergone training and passed the examination specified.
The applicant has in their employment a minimum of two broker qualified persons who have the necessary qualifications experience to conduct the business of insurance broker.
Application:
The application for new broker’s registration shall be accepted only through on-line mode.
Documents to be submitted:
1. Copy of Memorandum of Association (MoA) or Article of Association (AoA)
2. Copy of shareholders agreement, if any.
3. A certificate issued by the Chartered Accountant on the overall shareholding structure of applicant entity certifying the names of shareholders, date/s of allotments of shares made to each of them, date-wise nos. of shares allotted, total nos. of shares held by each of the shareholders, its percentage in the total shareholding of the entity, share certificate nos. & folio nos. along with the authorized and paid up capital of the applicant entity.
4. If the shareholder is individual, copy of last three years Income Tax Returns and its computation and the net worth certificate just prior to making investment in the applicant entity with its computation which should be issued by a Chartered Accountant.
5. A self-declaration in respect of promoters/shareholders/partners that the funds being invested as equity capital are out of their own earnings or savings and not out of borrowings.
6. Details of infrastructure for the registered office with the photopraphs of premises and the future planning for opening branch office at varous locations in the country and the estimated time frame.
7. Projection of administrative expenses, salaries and wages and other expenses, draw the revenue account, the profit and loss account and the balance sheet for the projected 3 years.
8. An organisation chart giving a complete picture of the company’s activities like IT, underwriting, risk assessment, claims settlement, marketing, accounts, back office etc.
9. List of experienced personnel inducted from insurance background with good knowledge and experience of working in the areas of risk assessment, underwriting and claims management etc. Detail CV, copies of educational qualifications along with their appointment/joining letters of the people, so selected.
10. Details of statutory auditors and Principal Bankers along with the Bank Account Number of the applicant.
11. Principal Officer to submit a declaration that the applicant (directors/partners, principal officer and key management personnel of the company) are not suffering from any of the disqualifications specified under section 42 D of the Act.
12. Details of Directors/ Partners, Promoter and Key Management Personnel
13. List of broker qualified persons who will be responsible for soliciting and procuring insurance business along-with their qualifications
14. Any other requirement as deemed necessary by the IRDAI.
The applicant on fulfilling the given requirements to the satisfaction of the Authority may be required to appear before the Authority for a presentation of business plans in connection with the application.
The applicant can be asked to furnish further information by the authority. The applicant has to submit these documents within 30 days from receiving the intimation from the authority.
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 certificate of registration as an Insurance Broker License would be given to the applicant when the applicant satisfies that the code of conduct would be adhered to.
Validity
A certificate granted by the IRDAI would be valid for three (3) years from the date of issue.
Applications for renewing an insurance broker licence must be made to the relevant authority 30 days before the expiry of the licence.
Fees:
The application fee for direct broker is Rs. 25,000/-.
Apart from this, there are mandatory fees that has to be paid for the registration requirements, Rs. 50,000/- after granting of an in-principal approval where the application is new.
Author Bio
Can you share the portal link to apply for NOC from IRDA.