IRDA allows banks to act as insurance brokers

To qualify for the licence, each bank will have to have the principal officer

August 12, 2013 11:06 IST | India Infoline News Service
Insurance Regulatory and Development Authority (IRDA) has allowed banks to act as brokers and sell products of more than one insurer in order to increase the penetration of the sector across the country.

There is no capital requirement for insurance broking business carried out by banks, according to Irda (Licencing of Banks as Insurance Brokers) Regulations, 2013.

To qualify for the licence, each bank will have to have the principal officer. '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, the IRDA said in the notification on 8th August.

The licence, once issued, will be valid for three years from the date of issue, it said, adding that the renewal of licence can be applied 30 days before expiry of licence.

Every insurance broker shall take out and maintain a professional indemnity insurance cover throughout the validity of the period of the licence granted to him by the Authority, it added.

Every insurance broker will, before the commencement of the business, deposit and keep deposits with any scheduled bank as sum of Rs 50 lakh, it said.

Every insurance broker shall prepare for every accounting year a separate books of accounts for their insurance broking operations.

The business of the insurance broker will have to be carried out in the such a manner that not more than 50% of the premium emanates from any one client.

"Not more than 25 per cent of insurance handled by the insurance broker in any financial year is placed with the insurance company within the promoter group, separately for life and general insurance business," IRDA said.

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