InsuranceDekho, one of India’s largest distribution insurtech has recently got a composite insurance broking license. With the license update, InsuranceDekho can now solicit reinsurance business in addition to the direct insurance business it was already conducting.
In February, Policybazaar.com also upgraded its license to a composite broker license. Composite broking license has been around for a while. In case you are wondering if as an Indian insurtech startup, you will be eligible to get a similar license, here’s a explainer to help you through the application procedure for a similar license
Policybazaar has a composite broker license, can any startup get one?
You can get a composite broking license if you fulfil the requirements laid down under the IRDAI (Insurance Brokers) Regulations 2018 (“Brokers Regulations”), namely:
Incorporation documents: MoA & AoA must state that your main business is insurance brokerage – in this case composite (direct & reinsurance) insurance broking.
Foreign investors: Permitted – for a detailed overview refer the article here
Capital required: ~600kUSD
Net-worth required: ~300kUSD
Deposit required: ~60kUSD
Application process: Gather all the documents and information as listed under Form B & Form C of the Brokers Regulations & submit to the IRDAI. The online portal is www.irdabap.org.in.
Application is approved in 2 stages (in-principle approval and final approval), wherein you may be required to submit more information
Application fees: ~900USD, an additional ~3kUSD after in-principle approval comes through
Office & Personnel: A sale deed or lease deed or ownership document evidencing office space is essential. Further, the broker is required to have 1 Principal Officer, and 2 Broker Qualified Personnel
Principal Officer is a KMP/whole-time-director or top management of the broker. Principal Officer & Broker Qualified Personnel are required to complete mandatory training (refer Broker Regulations)
Additional requirements: Professional indemnity insurance cover (refer the Broker Regulations & the Guidelines here)
What are the other categories of insurance brokers under the IRDAI framework?
There are five categories of insurance broker which are
- Direct Broker (Life),
- Direct Broker (General),
- Direct Broker (Life & General),
- Reinsurance Broker and
- Composite Broker.
The registration requirements are similar with capital, net-worth requirements being the highest for composite broker. Refer Broker Regulations for thresholds under the different categories.
Reference:
IRDAI (Insurance Brokers) Regulations, 2018
Official website: irdai.gov.in
Guidelines on Standard Professional Indemnity Policy read with the Circular
Disclaimer: The views expressed are personal opinion of the author and in no way constitute legal or financial advice.
