An insurance broker license allows you to establish yourself as an insurance intermediary. After getting it, you can either act as a bridge between an insurance company and a customer, a reinsurance company and an insurance company, or a combination of both. A broker is a versatile insurance entity and therefore, before you step forth to obtain the license, keep in mind some important facts about it.
If it is one service that will always be in demand, it is insurance. Regardless of how terrible the times are now, they can always get worse. The people realize that and therefore, buy policies to ensure their health, their property, or, their life. Such a demand has been given to many entities that cater to this sector. However, there is one that has more trust than anyone else – an Insurance broker.
Licensed by the IRDA to act as an intermediary on behalf of the customer, an insurance broker is the most complete insurance entity. Like an insurance agent, it can converse with people. But, unlike an agent, it is an organization that relies on regulations and ethical approaches to selling insurance products.
To become this entity, you must first know some essential facts about it. Here, we are listing just some of them.
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Types of Insurance Brokers in India
Before you attempt to become an insurance broker, decide which type of insurance broker you want to become. There are three types of entities engaged with insurance broking services
Direct Brokers
They are the ones that pop in mind whenever you hear the term – broker. Acting as an intermediary between an insurance company and a customer, their job is to:
- Closely watch the insurance market;
- Advising the clients about the insurance policies;
- Picking the best insurance policies per the requirements of customers;
- Helping clients with paying the insurance premiums;
- Interpreting the terms of insurance policies to the clients
Reinsurance brokers
Every insurance policy carries a certain level of risk. To manage it, and to ensure that their insurance policies aren’t misused, the insurance companies reach out to reinsurance brokers. Their job is to:
- Closely watch the reinsurance marketing;
- Advising the companies about the reinsurance policies;
- Picking the best reinsurance policies for their client companies;
- Providing risk assessment services for every insurance policy
Composite broker
These insurance brokers are the amalgamation of reinsurance and insurance brokers. The services they provide are, therefore, a combination of both of them.
Entities that can become an Insurance broker
Insurance broking licenses can only be issued to certain entities, and none of them are individuals.
- A company that has registered under the Companies Act, 2013
- A cooperative society with registration under the Societies Act
- An LLP with registration under the Limited Liability Partnership Act, 2008
Therefore, before you apply for the license to become a broker, make sure that you have registered as one of the above entities.
Training is mandatory
The insurance policy market is one that has a lot of complexities. And the terms and conditions of each policy are difficult for the general public to understand. Therefore, the IRDA only provides insurance services to those who have acquired the training completion certificate.
The principal officer of your insurance broking company must go through at least 50 hours of insurance broker training. After the training is complete, you will sit the exam. Whether or not the IRDA considers you right for the license depends on the result of this examination.
The license is only valid for 3 years
The validity of the insurance broker license is only for three years, the same goes for the principal officer’s IRDA training certificate.
What it means is that after three years, the license has to be renewed. And that can only after the principal officer retakes the training and again sits in the examination.
Conclusion
The license to start an insurance broker business is one that has several caveats. You have to keep them in mind before you step into the fray and become the representative of a customer in the insurance domain. If you need further details about the insurance broking license, make sure that you have our experts on speed dial.
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