Mumbai, April 10: The Insurance Regulatory and Development Authority (IRDA)has announced entry-level norms for the four defined categories of brokers:insurance, re-insurance, composite and others.While insurance and risk management consultants and others approved by IRDAfall under the category `others', composite brokers are those who canundertake direct insurance and re-insurance broking businesses.
So far non-life companies were allowed to seek services of re-insurancebrokers to place a re-insurance deal in the international market.
Re-insurance is where an insurance company is able to hedge their risk inthe international market.
The solvency margin for brokers, as stipulated by the authority, for directinsurance broker is 10 per cent of brokerage in a year subject to a minimumof Rs 50,000.
For re-insurance broker 10 per cent of brokerage and fees in yearsubject to minimum of Rs 2,00,000,* For composite broker, 10 per cent of brokerage and fees in year subject tominimum of Rs 2,50,000.
The applicant should have a minimum qualification as associate for insuranceinstitute of India or its equivalent or any professional qulaification froman institution recognised by the Government in fiance,law or businessmanagment and practical training for a period not less than twelve months.
However, the authority on consideration of the qualification and exprienceof such a person may exempt the person from the provisions of this section,in case a person is carrying reinsurance broking and or insuranceconsultancy for a continuous period of ten yeras before these regulationscome into force and who is required to be licensed under the regulation Theauthority issued a detailed guidelines instructing broker to maintaininsurance money segregation.
* Treat all money(premiums and claims) received from or on behalf of aninsured as `insurance money'
* Ensure that `insurance money is held in an `insurancve bank account' withone or more scheduled banks or with such other institutions asapproved bythe authority.
* Only remove from the insurance bank account charges fees or commissionearned and interest received from any funds comprosing the account. Alicense granted to an insurance broker will be valid for three years. Therefusal to grant license shall be communicated by theauthority within thethirty days of such refusal to the applicant stating the grounds on whichthe application has been rejected.
Any applicant may being aggrieved by the decision of the authority applywithin a period of thirty days from the date of receipt of such informationto the authority for reconsideartion of the decision.
Any person who acts as an insurance broker without holding a license will bepunishable by the authority with a fine which may extend to rupees one lakh.Also any insurer who appoints an insurance broker not licensed to act assuch shall be punishable by the authority with a fine to the tune of fivelakh.
Every insurance broker shall take out and maintain a professional indemnityinsurance cover throughout the validity of its license.
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