IRDAI (Insurance Broker) Regulations, 2018

1 Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 20181 (amended upto 30.10.2019) F.NO. IRDA/REG/2/149/2018- In exercise of the powers conferred by sections 42D, 42E and 114A of the Insurance Act, 1938 (4 of 1938) read with sections 14 and 26 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), the Authority in consultation with the Insurance Advisory Committee, hereby makes the following regulations, namely: - Objective: The objective of these Regulations is to supervise and monitor insurance broker as an insurance intermediary. 1. Short title and commencement — (1) These regulations may be called the Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2018. (2) These regulations shall come into force on the date of their publication in the Official Gazette and supersede Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013 with effect from such date. CHAPTER – I 2. Definitions — (1) Unless the context otherwise requires, — a. “Act” means the Insurance Act, 1938 (4 of 1938); b. “Applicant” means a person for registration as insurance broker as referred to in these regulations; c. "Authority" means the Insurance Regulatory and Development Authority of India established under sub-section (1) of section 3 of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999); d. “Broker Qualified Person” means 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 for them; e. “Composite Broker” means an Insurance Broker, registered by the Authority who for a remuneration and/or a fee, solicits and arranges insurance and/or re-insurance for its clients with insurers and/or reinsurers located in India and/or abroad; and/or provides claims 1 Vide Notification No. IRDAI/Reg/2/149/2018, dated 12th January, 2018, published in the Gazette of India, Extraordinary, Part III, Sec.4, vide No. 26, dated 12th January, 2018 (w.e.f.19.01.2018) 2 consultancy, Risk Management services or other similar services, permitted under these regulations. f. “Direct Broker” means an Insurance Broker, registered by the Authority, who for a remuneration and/or a Fee, solicits and arranges insurance business for its clients with insurers located in India and/or provides claims consultancy, Risk Management services or other similar services, permitted under these regulations. g. "Enquiry officer" means an officer of the Authority, or any other person having experience in insurance business, who is appointed by the Authority under regulation 52, to hold an enquiry against an insurance broker; h. “Fee” means payment received by the insurance broker from the client for undertaking any of the services provided to the client, as permitted under these regulations, including claims consultancy, risk management service or other similar services which is not a percentage of premium or claim amount. i. "Form" means the forms specified under these regulations; j. "Inspecting authority" means one or more of its officers appointed by the Authority to discharge the functions stated in regulation 42; k. “Insurance Broker" means a person who is a direct broker, a reinsurance broker or a composite broker for the time being registered by the Authority, as the case may be, unless expressly stated to the contrary; l. “Key Management Person” includes Chief Executive Officer, Chief Marketing Officer, Chief Finance Officer, Chief Technical Officer/ Head-IT, Head-Reinsurance and Compliance Officer. m. “Person” means─ (i) A company formed under the Companies Act, 2013 (18 of 2013); or (ii) A co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the registration of co-operative societies; or (iii)A limited liability partnership formed under the Limited Liability Partnership Act, 2008(6 of 2009) with no partner being a non-resident entity/ person resident outside India as defined in clause(w) of section 2 of the Foreign Exchange Management Act, 1999(42 of 1999) (FEMA), and not being a foreign limited liability partnership registered thereunder; or (iv) Any other person as may be recognized by the Authority to act as an insurance broker; n. "Principal Officer" means - an officer in an executive role designated as such for the purpose of performing the duties and responsibilities as specified in these regulations to carry out 3 the functions of an insurance broker and who shall bethe chief executive officer or a whole- time director or managing director, managing partner or a managing trustee or such individual appointed / engaged exclusively to carry out the functions of an insurance broker; o. "Regulations" means Insurance Regulatory and Development Authority of India(Insurance Brokers) Regulations, 2018 as amended from time to time; p. “Reinsurance Broker” means an Insurance Broker, registered by the Authority who for a remuneration and/or a Fee, solicits and arranges re-insurance for its clients with insurers and/or reinsurers located in India and/or abroad; and/or provides claims consultancy, Risk Management services or other similar services, permitted under these regulations. q. “Risk Management” means providing any sort of insurance risk management services by an insurance broker to its clients such as risk assessment, risk advisory, risk mitigation or risk minimization for the benefit of its client; r. ‘Scheme of amalgamation’ or ‘merger and acquisition’ means the scheme formulated as per Sections 230 - 240 of the Companies Act, 2013; s. ‘Scheme of transfer of business’ means the scheme for transfer of whole or part of business / assets of the insurance broker; t. “Solicitation” – for the purpose of these regulations is defined as the approach of an insurer or an intermediary to the client with a view to convince the client to purchase an insurance or reinsurance policy; u. ‘Transferor’ means the registered Insurance Broker that transfers the business to another registered Insurance intermediary. (2) Words and expressions used and not defined in these regulations but defined in the Insurance Act, 1938 (4 of 1938), or the Life Insurance Corporation Act, 1956 (31 of 1956) or the General Insurance Business (Nationalization) Act, 1972 (57 of 1972), or Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) shall have the meanings respectively assigned to them in those Acts or the rules and regulations made thereunder, as the case may be. CHAPTER – II REGISTRATION AND RENEWAL OF CERTIFICATE OF REGISTRATION 3. Categories of the Insurance brokers – (1) Application for grant of certificate of registration to act as an insurance broker shall be 4 made for any one of the following categories, namely: (a) direct broker (life) (b) direct broker (general) (c) direct broker (life & general) (d) reinsurance broker (e) composite broker (2) An applicant or its group entities ordinarily may be granted one certificate of registration. However, an application for an insurance broker registration where any applicant or its group entities is already engaged in insurance intermediation including insurance broking shall be considered on merits and subject to there being no conflict of interest. Note: For the purposes of these regulations, the definition of "group" shall have the same meaning as defined under Insurance Regulatory and Development Authority of India (Investment) Regulations, 2016 as amended from time to time, or any other direction issued in this regard by the Authority. 4. Functions of an Insurance Broker: The functions of Direct Broker, Reinsurance Broker and Composite Broker are outlined in Schedule I – Form A of these regulations. PART -- A New Certificate of Registration 5. Submission of Application for grant of certificate of registration — (1) An application to act as an insurance broker shall be made in application form as specified under Schedule I - Form B of these regulations to the Authority. (2) The application for grant of certificate of registration shall be as per Regulation 3 above. (3) Application for grant of certificate of registration shall be submitted along with the requisite documents as specified in Schedule I – Form C of these regulations. (4) Application for grant of certificate of registration shall be submitted along with the requisite fees as specified in Schedule I – Form D of these regulations. 6. Application to conform to the requirements – (1) An application, not complete in all respects and not conforming to the instructions specified in Schedule I - Form B and these regulations and not complying with the requirements 5 and/or directions of the Authority, shall be liable for rejection. Provided that, before rejecting any such application, the applicant shall be given a reasonable opportunity to complete the application in all respects and rectify the errors, if any. 7. Furnishing of information, clarification and personal representation — (1) The Authority may require an applicant to furnish any further information and/or clarification and/or may direct the applicant to comply with certain requirement/s for the purpose of disposal of the application, and, thereafter, in regard to any other matter as may be deemed necessary by the Authority. (2) The Authority shall give, the applicant an opportunity to submit the requirements/ clarifications/ additional information etc sought by the Authority, within 30 days from the date of receipt of the communication from the Authority. (3) The applicant along with their principal officer shall, if so required, appear before the Authority for a personal representation in connection with the application. (4) The Authority may direct an applicant to submit any information/ data/ clarification as may be required for the processing/ disposal of the application so made to it. (5) The applicant shall bring to the notice of the Authority, on its own forthwith, such further information/or clarification, which might have a bearing on consideration of their application. 8. Consideration of application — (1) The Authority while considering an application shall take into account, all matters relevant for carrying out of the functions of the insurance broker. (2) Without prejudice to the provisions of (1) above, the Authority in particular, shall take into account the following, namely:- (a) Whether the applicant is suffering from any of the disqualifications specified under sub- section (5) of section 42 D of the Act; (b) Whether the applicant has the necessary infrastructure, such as, adequate office space, equipment, trained manpower and IT infrastructure to effectively discharge its activities; (c) Whether the applicant has in their employment a minimum of two broker qualified persons who have the necessary qualifications specified in Schedule I – Form E and experience to conduct the business of insurance broker and in case applicant has 6 certain branch offices, one broker qualified person per branch office having the necessary qualifications specified in Schedule I – Form E of these regulations and experience to conduct the business of insurance broker. Note: In case the insurance broker intends to carry on both life and general insurance business, then at least one broker qualified person each shall have relevant experience in life and general insurance and necessary qualifications specified in Schedule I – Form E of these regulations should be present in the company. In case of exit of a broker qualified person from any of the branches, the charge can be given to another broker qualified person on ad-hoc basis and the insurance broker shall take necessary steps to appoint a broker qualified person at the earliest possible time. However, such arrangements need to be informed to the Authority. If an insurance broker fails to comply with this condition in any of the branch offices under their control, they shall not carry any business in that branch till such a broker qualified person with necessary qualifications as specified in Schedule I – Form E of these regulations is appointed. (d) Whether any person, directly or indirectly connected with the applicant, has, in the past, been refused grant of a certificate of registration or license by the Authority. Explanation:— For the purposes of this sub-clause, the expression "directly or indirectly connected" means a relative in the case of an individual, and in the case of a firm or a company or a body corporate, an associate, a subsidiary, an interconnected undertaking or a group company of the applicant. It is hereby clarified that these terms shall have the same meanings as ascribed to them in the Companies Act, 2013 (18 of 2013) or The Competition Act, 2002, as the case may be. (e) Whether the applicant fulfills the capital requirements as specified in regulation 19; Net Worth requirement as specified in regulation 22 and deposit requirements as specified in regulation 23. (f) Whether the principal officer of the applicant possesses the required qualification, undergone training, passed the examination, possesses the necessary certificate and fulfills other requirements as specified in Schedule I – Form E of these regulations. The information required under Schedule I – Form F of these regulations shall be submitted by Director(s)/ Promoter(s)/ Partner(s)/ Key Management Personnel, in addition to Principal Officer of the applicant. (g) Whether in the opinion of the Authority the Principal Officer of the applicant is suitable to be so appointed keeping in view his experience, preferably in the insurance sector. 7 (h) Whether the Principal Officer/ Director(s)/ Promoter(s)/ Partner(s)/ Key Management Personnel are Fit and Proper based on the statement in Schedule I – Form G of these regulations. (i) Whether the principal officer and/or any other official of the insurance broker has violated the code of conduct as specified in Schedule I – Form H and Schedule I – Form I, as applicable, of these regulations; (j) Whether the applicant is engaged in any other business other than the main objects clause of the MOA/ AOA or its equivalent; (k) Whether the promoters/ investors/ foreign investors/ partners of the applicant are of sound financial position to make investment in the applicant entity. (l) Whether the broker qualified persons fulfill the requirements mentioned in Schedule I – Form E of these regulations and a list of such broker qualified personsshall be provided to the Authority. (m) Whether the Authority has rejected the application for grant of certificate of registration or the applicant has withdrawn the application for any reason at any time during the preceding financial year from the date of application. (n) Whether the foreign investor or Indian Promoter of the existing venture has exited for any reason at any time during the preceding two financial years from the date of application. Provided the Authority, considering the interests of the policyholders and overall growth and development of the insurance sector, may relax the condition of two year waiting to such time as it may so specify. (o) Whether the issue of certificate of registration will be in the interest of policyholders. 9. Payment of fees and the consequences of failure to pay fees — (1) Every applicant eligible for the grant of a certificate of registration and renewal of certificate of registration shall pay such fees in such a manner and within such a period as specified in Schedule I – Form D of these regulations. (2) The Authority shall not process any application which does not carry the required fees. 10.Procedure for issuance of Certificate of Registration – (1) The Authority on being satisfied that the applicant fulfills all the conditions specified for the issuance of Certificate of Registration, shall first issue an in-principle approval to the applicant for compliance of requirements for issuance of Certificate of Registration.