| Notification Detail :
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (LICENSING OF BANKS AS INSURANCE BROKERS) REGULATIONS, 2013*
NOTIFICATION F.NO. IRDA/REG./21/79/2013, DATED 19-7-2013
In exercise of the powers conferred by section 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) and sections 42D and 42E of Insurance Act, 1938, the Authority in consultation with the Insurance Advisory Committee, hereby makes the following regulations, namely:-
Short title and commencement
1. (1) These regulations may be called the Insurance Regulatory and Development Authority (Licensing of Banks as Insurance Brokers) Regulations, 2013.
(2) They shall come into force on the date of their publication in the Official Gazette.
Definitions
2. (1) Unless the context otherwise requires, -
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(a)
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'Act' means the Insurance Act, 1938 (4 of 1938);
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(b)
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'Advisory Committee' means the Advisory Committee constituted under section 25 of the Insurance Regulatory and Development Authority Act (41 of 1999);
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(c)
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'Authority' means the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);
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(d)
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Direct Broker" means an insurance broker who is either Direct Broker Composite, or Direct Life or Direct Broker Non-Life;
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(e)
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'Direct Broker Composite' means an insurance broker who for the time-being licensed by the Authority to act as such, for a remuneration carries out the functions as specified under regulation 3 in the field of life insurance and general insurance on behalf of his clients;
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(f)
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'Direct Broker Life' means an insurance broker who for the time-being licensed by the Authority to act as such, for a remuneration carries out the functions as specified under regulation 3 in the field of life insurance on behalf of his clients;
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(g)
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'Direct Broker Non-Life' means an insurance broker who for the time-being licensed by the Authority to act as such, for a remuneration carries out the functions as specified under regulation 3 in the field of general insurance on behalf of his clients;
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(h)
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'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 34, to hold an enquiry against an insurance broker;
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(i)
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'Form' means the forms specified under these regulations;
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(j)
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'Inspecting Authority' means one or more of its officers appointed by the Authority to discharge the functions stated in regulation 26;
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(k)
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'Insurance Broker' means a person for the time-being licensed by the Authority under regulation 9, who for a remuneration arranges insurance contracts with insurance companies on behalf of his clients;
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Explanation : The term 'insurance broker" wherever it appears in these regulations shall be deemed to mean a direct broker;
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[Add definition of Direct Broker]
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(l)
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'Person' means- A Scheduled Bank included in the Second Schedule to the Reserve Bank of India Act, 1934;
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(m)
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'Principal Officer' means - a general manager or equivalent cadre of the respective licensed entity appointed exclusively to carry out the functions of an insurance broker and positioned at corporate office;
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(n)
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'Regulations' means Insurance Regulatory and Development Authority (Licensing of Banks as Insurance Brokers) Regulations, 2013;
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(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 (Nationalisation) Act, 1972 (57 of 1972), or Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2002 and Insurance Regulatory and Development Authority (Insurance Brokers) (Second Amendment) Regulations, 2002 shall have the meanings respectively assigned to them in those Acts or the rules and regulations made thereunder, as the case may be.
Functions of a direct broker
3. The functions of a direct broker shall include the following:
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(a)
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obtaining detailed information of the client's business and risk management philosophy;
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(b)
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familiarising himself with the client's business and underwriting information so that this can be explained to an insurer and others;
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(c)
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rendering advice on appropriate insurance cover and terms;
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(d)
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maintaining detailed knowledge of available insurance markets, as may be applicable;
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(e)
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submitting quotation received from insurer/s for consideration of a client;
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(f)
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providing requisite underwriting information as required by an insurer in assessing the risk to decide pricing terms and conditions for cover;
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(g)
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acting promptly on instructions from a client and providing him written acknowledgements and progress reports;
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(h)
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assisting clients in paying premium under section 64VB of Insurance Act, 1938 (4 of 1938); the provisions of section 64VB of the act shall continue to determine the question of assumption of risk by an insurer;
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(i)
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assisting in the negotiation of the claims; and
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(j)
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maintaining proper records of claims.
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Application for grant of licence
4. (1) An application by a person for grant of a licence as an insurance broker shall be made in Form A to the Authority.
(2) The application under sub-regulation (1) shall be made for direct broker category, along with the requisite fees as specified in regulation 16.
(3) The applicant under sub-regulation (1) shall have obtained the prior approval of Reserve Bank of India before applying for licence to act as insurance broker.
Application to conform to the requirements
5. An application, not complete in all respects and not conforming to the instructions specified in the Form A and these regulations, shall be rejected:
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.
[The documentation & procedural requirements for obtaining fresh broker license is annexed to these regulations at Annexure-I.]
Furnishing of information, clarification and personal representation
6. (1) The Authority may require an applicant to furnish any further information or clarification 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 applicant or its principal officer shall, if so required, appear before the Authority for a personal representation in connection with an application.
Consideration of application
7. (1) The Authority while considering an application for grant of a licence shall take into account, all matters relevant to the carrying out of the functions by the insurance broker.
(2) Without prejudice to the above, the Authority in particular, shall take into account the following, namely:-
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(a)
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whether the applicant is not suffering from any of the disqualifications specified under sub-section (5) of section 42D of the Act;
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(b)
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whether the applicant has the necessary infrastructure, such as, adequate office space, equipment and trained manpower to effectively discharge his activities;
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(c)
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whether the applicant has in his employment a minimum of two persons who have the necessary qualifications specified in clause (f) below and experience to conduct the business of insurance broker;
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(d)
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whether any person, directly or indirectly connected with the applicant, has been refused in the past the grant of a licence by the Authority.
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a.
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Explanation : For the purposes of this sub-clause, the expression "directly or indirectly connected'' means 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, 1956 (1 of 1956) or The Competition Act, 2002, as the case may be.
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(e)
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whether the applicant fulfils the deposit requirements as specified in regulation 20;.
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(f)
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whether the principal officer of the applicant has received at least one hundred hours of theoretical and practical training from an institution recognized by the Authority from time to time and has passed an examination, at the end of the period of training mentioned above, conducted by the National Insurance Academy, Pune or any other examining body recognised by the Authority:
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Provided that where the principal officer of the applicant is an Associate/ Fellow of the Insurance Institute of India, Mumbai; or Associate/ Fellow of the CM, London; or Associate/ Fellow of the Institute of Actuaries of India; or any post graduate qualification of the Institute of Insurance and Risk Management, Hyderabad; the theoretical and practical training from an institution recognised by the Authority from time to time according to a syllabus approved by the Authority shall be fifty hours.
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(g)
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whether the principal officer has not violated the code of conduct as specified in Schedule II to these regulations;
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(h)
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the applicant is allowed to do insurance broking in addition to their main objects; and
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(i)
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the Authority is of the opinion that the grant of licence will be in the interest of policyholders.
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(3) Any employee responsible for soliciting and procuring insurance business on behalf of an insurance broker shall also have to fulfil the requirements mentioned in sub-regulation 2(f) above and a list of such employees need to be provided to the Authority and acknowledged by it.
Requirements of Capital
8. (1) There is no requirement of capital for insurance broking business for entities licensed under the IRDA (Licensing of banks as Insurance brokers) Regulations, 2013
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(a)
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the applicant shall be permitted to carry on the business of an insurance broker as licensed under these regulations in addition to their main objects.
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(b)
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the calculation of non-Indian interest in the applicant company shall be as per the limits applicable to banking sector as decided from time to time by Government of India / Reserve Bank of India.
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Procedure for licensing
9. The Authority on being satisfied that the applicant fulfils all the conditions specified for the grant of licence, shall grant a licence in Form B and send an intimation thereof to the applicant mentioning the category for which the Authority has granted the licence The licence shall be issued subject to the insurance broker adhering to the conditions and the code of conduct as specified by the Authority from time to time.
Validity of licence
10. A licence once issued shall be valid for a period of three years from the date of its issue, unless the same is suspended or cancelled pursuant to these regulations.
Renewal of licence
11. (1) An insurance broker may, within thirty days before the expiry of the licence, make an application in Form A to the Authority for renewal of licence:
Provided however that if the application reaches the Authority later than that period but before the actual expiry of the current licence, an additional fee of rupees one hundred only shall be payable by the applicant to the Authority:
Provided further that the Authority may for sufficient reasons offered in writing by the applicant for a delay not covered by the previous proviso, accept an application for renewal after the date of the expiry of the licence on a payment of an additional fee of seven hundred and fifty rupees only by the applicant.
(2) Principal Officer and employees responsible for soliciting insurance business of an insurance broker before seeking a renewal of licence, shall have completed, at least twenty five hours of theoretical and practical training, imparted by an institution recognized by the Authority from time to time.
(3) The application for a renewal, under sub-regulation (1) shall be dealt with in the same manner as is specified under regulation 7.
(4) The Authority, on being satisfied that the applicant fulfils all the conditions specified for a renewal of the licence, shall renew the licence in Form B for a period of three years and send intimation to that effect to the applicant.
[Explanation : where a broker has submitted a renewal application in terms of regulation 11 and the applicant does not suffer from any of the disqualifications specified in sub-sections (3) and (5) of section 42D of the Insurance Act, 1938 and that IRDA has not taken any adverse action against the said company as on the date of renewal and/or on the date of receipt of the renewal application, the Authority may issue a letter to the said broker for continuation of its functions for the next 90 days (w.e.f. date of due renewal) if the license is not renewed from the due date of renewal on time. If there are any other administrative reasons or any further delay in the renewal of the license, Authority may inform to the broker for such continuation of its business. It is made clear that the insurers shall not withhold remuneration of the broking companies during the period such a continuation letter issued by the IRDA.]
[The documentation & procedural requirements for obtaining renewal broker license is annexed to these regulations at Annexure-II.]
Procedure where a licence is not granted
12. (1) Where an application for grant of a licence under regulation 4 or of a renewal thereof under regulation 11, does not satisfy the conditions set out in regulation 7, the Authority may refuse to grant the licence:
Provided that no application shall be rejected unless the applicant has been given a reasonable opportunity of being heard.
(2) The refusal to grant a licence shall be communicated by the Authority within thirty days of such refusal to the applicant stating therein the grounds on which the application has been rejected.
(3) Any applicant, if aggrieved by the decision of the Authority, may apply within a period of thirty days from the date of receipt of such intimation, to the Chairman of the Authority for a reconsideration of its decision.
(4) The Chairman of the Authority shall consider such an application and communicate his decision thereon to the applicant in writing within six weeks of the receipt thereof.
(5) In case the license issued under regulation 9 is cancelled/surrendered or refused to renew for the reasons specified, the applicant has to wait for applying afresh for a period of one year from the date of such cancellation/surrender or rejection of renewal of license for consideration of the Authority.
Effect of refusal to grant licence
13. Any applicant, whose application for grant of a licence under regulation 4 or of a renewal thereof under regulation 11 has been refused by the Authority, shall, on and from the date of the receipt of the communication under regulation 12(2) cease to act as an insurance broker. He, however, shall continue to be liable to provide services in respect of contracts already entered into through him. Such a service shall continue only upto the period of expiry of those current contracts, details of which shall be disclosed to the Authority on receipt of the communication under regulation 12.
Issue of a duplicate licence
14. (1) In the event of a licence being lost or destroyed or mutilated, an insurance broker shall submit to the Authority an application alongwith a fee of rupees one thousand requesting for the issue of a duplicate licence and with a declaration giving full details regarding the issue of the licence and its loss or destruction or mutilation.
(2) The Authority, after satisfying itself that the original licence has been lost, destroyed or mutilated, shall issue a duplicate licence in Form B with an endorsement thereon that it is a duplicate one.
Action against a person acting as an insurance broker without a valid licence
15. (1) Notwithstanding and without prejudice to initiation of any criminal proceedings against any person, who acts as an insurance broker without holding a valid licence issued under these regulations, the Authority may invoke against such a person penal action under the Act or any other law for the time being in force.
(2) Where the person falling under sub-regulation (1), is a company or firm or body corporate, without prejudice to any other proceedings which may be taken by the Authority against the company or firm or body corporate, every director, manager, secretary or other officer of the company or body corporate, and every partner of the firm, who is knowingly a party to such a contravention shall also be liable to be proceeded against.
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