(Insurance Brokers) Regulations, 2018

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)

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 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 the functions of an insurance broker and who shall be the chief executive officer or a wholetime 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 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 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 subsection (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 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.

(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 fulfil the requirements mentioned in Schedule I – Form E of these regulations and a list of such broker qualified persons shall 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.

(2) The Authority upon satisfying itself of the conditions specified in the in-principle approval or other conditions of the Act, Rules, regulations, circulars, guidelines, etc., may issue a Certificate of Registration as prescribed in Schedule I – Form J of these regulations stating the category.

(3) The Certificate of Registration 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.

(4) An insurance broker registered under these regulations for a specified category may also apply for the issuance of Certificate of Registration for any other category by fulfilling the requirements of these regulations. However, such application shall be made only after completion of one year from the issuance of certificate of registration in the first instance.

(5) In case a Certificate of Registration issued under these regulations or a License issued under previous regulations, is cancelled or surrendered or whose renewal is rejected by the Authority by an Order and such Order is upheld by the Securities Appellate Tribunal or any Court of Law, the applicant may then make a fresh application for grant of Certificate of Registration only after lapse of one year from the effective date of such Order for consideration of the Authority. The Authority may consider such application on merit.

11. Validity of Certificate of Registration —

(1) A Certificate of Registration once issued shall be valid for a period of three years from the date of issue, unless the same is suspended or cancelled under these regulations.

(2) No insurance broker shall be permitted to do business without a valid and current Certificate of Registration.

12. Rejection of Application—

(1) Where an application for issuance of Certificate of Registration under these regulations does not satisfy the conditions set out in regulation 8 and 9, the Authority may refuse grant of Certificate of Registration;

Provided that no application shall be rejected unless the applicant has been given a reasonable opportunity of being heard.

Any applicant, aggrieved by the Order of the Authority, may appeal to the Securities Appellate Tribunal

(2) The Order of refusal to grant Certificate of Registration 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) If the application is rejected and the applicant chooses not to appeal against the order of rejection of application, the applicant may make a fresh application for issuance of certificate of registration after lapse of one year from effective date of such Order for consideration by the Authority. The Authority may consider such application on merit.

13. Conditions of grant of registration to Insurance Broker –

The registration granted under these regulations or the renewal of registration granted under these regulations shall, inter alia, be subject to the following conditions:-

(1) The Insurance Broker registered under these regulations shall act exclusively to carry on the business of an insurance broker as permitted under these regulations;

(2) The Insurance Broker shall comply with the provisions of the Act, Insurance Regulatory and Development Authority Act, 1999 and the Regulations, Circulars, Guidelines and any other instructions issued there under from time to time by the Authority;

(3) The Insurance Broker shall forthwith inform the Authority in writing, if any information or particulars previously submitted to the Authority by them are found to be false or misleading in respect of any material particular or if there is any material change in the information already submitted;

(4) The Insurance Broker shall take adequate steps for redressal of grievances of its clients within 14 days of receipt of such complaint and keep the Authority informed about the number, nature and other particulars of the complaints received from such clients in format and manner as may be specified by the Authority;

(5) The Insurance Broker shall solicit and procure reasonable number of insurance policies commensurate with their resources and the number of Broker Qualified Persons they employ.

(6) The Insurance Broker shall maintain records in the format specified by the Authority which shall capture policy-wise details wherein each policy solicited by the Insurance Broker is tagged to the broker qualified person or other authorised persons, wherever applicable.

(7) The Insurance Broker under no circumstance undertake multi-level marketing for solicitation and procuring insurance products;

(8) The Insurance Broker shall ensure compliance of Code of Conduct applicable to it;

(9) The Insurance Broker shall maintain books of accounts as specified in these regulations.

PART -- B

Renewal of Certificate of Registration

14. Renewal of Certificate of Registration—

(1) The application for renewal of certificate of registration shall be submitted to the Authority by the insurance broker in Schedule I – Form K of these regulations at least thirty days before the expiry of the certificate of registration.

Provided that if the application reaches the Authority later than the period mentioned in sub-regulation (1) above but before the actual expiry of the current certificate of registration, an additional fee of rupees one hundred shall be payable by the applicant to the Authority.

Provided further that in case the applicant submits in writing the reasons for the delay not covered by the previous proviso, and if the Authority is satisfied with those reasons, it may accept an application for renewal after the date of the expiry of the certificate of registration upto a period of 60 days of the expiry of certificate of registration, on payment of an additional fee of seven hundred and fifty rupees.

Provided further that the application for renewal received after 60 days of the expiry of the certificate of registration will be considered only after a lapse of 12 months from the date of submission of the late application. However, during the interregnum, the certificate of registration of the insurance broker shall cease to exist and it shall not solicit any new business, except servicing the existing policies till the expiry of the contract.

Note: An insurance broker is permitted to submit the application for renewal ninety days prior to the expiry of the registration.

(2) No insurance broker shall be allowed to do any fresh insurance business after expiry of the certificate of registration, except servicing the existing policyholders.

(3) The Principal Officer and Broker Qualified Persons of an insurance broker before seeking a renewal of certificate of registration shall have completed at least twenty-five hours of theoretical and practical training, imparted by an institution recognized by the Authority.

While doing so, they shall ensure that they complete the renewal training within six months prior to the expiry of three years from the time the previous training was completed.

(4) The application for renewal, under sub-regulation (1) shall be dealt with in the same manner as specified under regulation 8.

(5) The Authority may seek further information/ clarification/ data on the application submitted by the insurance broker while processing the application.

(6) The insurance broker shall submit such information as required under sub-regulation (5) above within 21 days of receipt of the communication from the Authority.

Provided if the applicant seeks additional time, for the reasons specified, for submission of information sought by the Authority under sub-regulation (5) above, the request may be considered by the Authority on merit.

(7) The certificate of registration of the insurance broker, on failing to comply with sub-regulation (6) above may be suspended till such time the information required under sub-regulation (5) above is received by the Authority.

(8) The Authority, on being satisfied that the applicant fulfills all the conditions specified for renewal of the certificate of registration, shall renew the certificate of registration in Schedule I – Form L for a period of three years and send intimation to that effect to the applicant.

(9) The category certificate of registration of an insurance broker may be modified by restricting its operation in a particular category where the certificate of registration was already issued by the Authority for the reasons specified in writing and after giving due notice to the insurance broker. In any case, no restriction of category of the certificate of registration shall be done unless the insurance broker has been given a reasonable opportunity of being heard.

Note: Documents to be attached with renewal application by insurance brokers as per Schedule I – Form M, Schedule I – Form N and Schedule I – Form O.

15. Procedure where a renewal of certificate of registration is not issued —

(1) Where an application for renewal thereof, does not satisfy the conditions set out in regulation 8, 9, and 14, the Authority may refuse to issue the certificate of registration.

Provided that no application shall be rejected unless the applicant has been given a reasonable opportunity of being heard.

(2) The refusal to issue certificate of registration 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, aggrieved by the decision of the Authority, may appeal to the Securities Appellate Tribunal.

16. Effect of refusal to issue certificate of registration —

(1) Any applicant, whose application for renewal thereof has been refused by the Authority, shall, on and from the date of the receipt of the communication cease to act as an insurance broker.

(2) The insurance broker, however, shall continue to be liable to provide services in respect of contracts already entered into through it.

(3) Such a service shall continue only upto the period of expiry of those current contracts or for a maximum period of six months, whichever is earlier, within which suitable arrangements shall be made by it for having the contracts attended to by another registered insurance broker.

(4) The details of the arrangements shall be disclosed to the Authority on receipt of the communication.

PART -- C

Duplicate certificate of registration

17. Issue of a duplicate certificate of registration —

(1) In the event of a certificate of registration being lost or destroyed or mutilated, an insurance broker shall submit to the Authority an application in the format given in Schedule I – Form P along with a fee of rupees one thousand requesting for the issue of a duplicate certificate of registration and with a declaration giving full details regarding the issue of the certificate of registration and its loss or destruction or mutilation.

(2) The Authority, after satisfying itself that the original certificate of registration has been lost, destroyed or mutilated, shall issue a duplicate certificate of registration as per format given in Schedule I – Form Q with an endorsement thereon that it is a duplicate.

Chapter – III

CORPORATE GOVERNANCE

18. Nomenclature of Insurance Brokers

(1) The insurance brokers shall have the word ‘Insurance Broker’/ ‘Insurance Brokers’/ ‘Insurance Broking’ in the name of the Insurance Broker to reflect their line of activity and to enable the public to differentiate insurance brokers registered with the Authority from other non-registered insurance related entities.

(2) The application of the new applicants seeking the registration as insurance broker shall not be considered in the absence of the compliance of the nomenclature requirement.

(3) Every insurance broker shall display, in all their correspondences with all stakeholders, their name registered with the Authority, address of the Registered and Corporate Office, IRDAI registration number, the category for which the insurance broker is registered, validity period of the registration.

(4) Insurance brokers shall not use any other name in their correspondence/ literature/ letter heads without the prior approval of the Authority.

19. Capital Requirement:

(1) Any applicant seeking to become an insurance broker under these regulations shall have a minimum paid up capital/contribution as mentioned below:

Category	Minimum Capital/ Contribution (Rupees)
Direct broker	Seventy-Five Lakh
Reinsurance broker	Four crore
Composite broker	Five crore

(2) the capital in the case of a company limited by shares and a cooperative society shall be in the form of equity shares;

(3) for the contribution of partners in the case of LLP shall only be in cash;

(4) the applicant shall exclusively carry on the business of an insurance broker as required under these regulations.

(5) the aggregate holdings of equity shares or contribution by foreign investors, including portfolio investors, shall be as prescribed by the Central Government from time to time;

(6) the shares of an insurance broker held as capital or contributions in case of a LLP or equivalent shall not be pledged in any form or manner to secure credit or any other facility and shall at all times be unencumbered.

(7) further, the investment in the applicant by the promoters/ shareholders/ partners shall be from their own funds and not from any other sources.

Explanation: For the purpose of these regulations own funds do not include funds arranged by way of borrowings or loans.

20. Manner of calculation of equity capital held by foreign investors

(1) The aggregate holdings of equity shares or contribution or equivalent in the Insurance Broker by foreign investors, including portfolio investors, shall not exceed such per cent of limits as prescribed by Central Government.

(2) For the purposes of the Act and these Regulations, the calculation of the holding of equity shares by one or more Foreign Investors in the applicant company, shall be as per details given in Schedule II – Form R.

21. [***].

21A. Foreign Investment

Every applicant, who is a company incorporated under the Companies Act, 2013 and has a majority of shareholding of foreign investors, shall furnish an undertaking as given in Schedule – AA.

22. Net-worth requirements

(1) The net-worth of an Insurance Broker shall at no time during the period of certificate of registration fall below:

i, rupees fifty lakh for direct broker;

ii, 50% of the minimum capital requirements or contribution or equivalent specified under Regulation 19(1) for reinsurance / composite broker.

Explanation: For the purposes of these regulations, “net-worth” shall have the meaning assigned to it in the Companies Act 2013 and as amended from time to time

(2) In case of non-compliance of sub-regulation (1) above, the Insurance Broker shall immediately restore the net-worth to the limits given in (1) above and report compliance of the same.

(3) The Insurance Broker shall submit to the Authority a net-worth certificate duly certified by an Auditor every half-year.

23. Deposit requirements —

(1) Every insurance broker shall before the commencement of their business, deposit and keep deposited with any scheduled bank a sum equivalent to:

i, rupees ten lakhs for direct broker

ii, 10% of the minimum capital/ contribution specified under Regulation 19(1)for reinsurance / composite broker in fixed deposit, which shall not be released to them without the prior written permission of the Authority.

Provided that the Authority may impose a separate limit of deposit, in any case not exceeding Rupees one hundred lakhs, for a person covered by regulation 2(1)(m)(iv).

(2) The deposit shall have a lien with the Authority.

(3) Such deposit shall not be pledged for taking any loan or overdraft facility by the insurance broker;

(4) Every insurance broker shall furnish to the Authority as and when called upon to do so a non-encumbrance statement from scheduled bank in which such fixed deposit is kept.

(5) The interest earned on the deposit shall not be subject to lien with the Authority.

24. Professional indemnity insurance —

(1) Every insurance broker shall take out and maintain at all times a professional indemnity insurance cover throughout the validity of the period of the Certificate of Registration issued to them by the Authority, as specified in Schedule II – Form S of these regulations.

Provided that the Authority shall in appropriate cases allow a newly registered insurance broker to produce such a policy within twelve months from the date of issue of certificate of registration.

25. Ownership and control of shares

(1) The beneficial ownership and control of the shares or contribution or equivalent in case of Insurance broker shall totally and completely rest with the entity/ individual approved by the Authority.

(2) The process of transfer of shares or contribution or equivalent in case of Insurance Broker is given in Schedule II – Form T of these regulations.

26. Remuneration and reward to be received by an Insurance Broker from an insurer–

(1) For Direct insurance business:

(a) The payment of remuneration and/ or reward to an insurance broker by an insurer shall be as per IRDAI (Payment of commission or remuneration or reward to insurance agents and insurance intermediaries) Regulations, 2016 notified by the Authority in this behalf;

Explanation: No remuneration or reward can be paid in respect of an insurance where agency commission is payable and likewise, no agency commission can be paid in respect of an insurance where remuneration is payable.

(2) For reinsurance business─

(a) as per market practices prevalent from time to time.

(b) The settlement of accounts by insurers in respect of remuneration of insurance brokers shall be done on a monthly basis and it must be ensured that there is no cross settlement of outstanding balances.

27. Risk Management Services –

(1) An insurance broker may charge the client fee for the services rendered by them to the client for risk management services or other similar services as per the functions defined under these regulations.

(2) The insurance broker can undertake this activity only for commercial risks based on the written confirmation from client for those fees.

(3) The Insurance broker cannot receive both the remuneration and reward as stipulated under the IRDAI (Payment of commission or remuneration or reward to insurance agents and insurance intermediaries) Regulations, 2016 and fees for the same risk management services as given in Regulation 2(1)(q).

(4) The insurance broker shall obtain a written mandate from the client to offer risk management services and shall keep a record of the risk management services offered to the client which will include details such as name of the client, place of risk, nature and type of risk management services undertaken, amount of fee charged from the client, basis of fee charged, etc.

(5) the insurance broker may charge fee for such other similar services as may be mutually decided between the insurance broker and the client.

(6) In case the insurance broker does not have the necessary skills and resources, it may engage external experts or specialists for undertaking the risk management services or such other similar services.

(7) In such case the insurance broker shall inform the client and shall keep a record of the risk management services or such other similar services offered to the client which will include details such as name of the expert, service rendered, fees paid, basis of fee paid, etc.

(8) The insurance broker shall be responsible for all acts of the external experts for undertaking risks management services.

28. Claim Consultancy -

(1) Insurance brokers may undertake claims consultancy only for commercial lines of general insurance business, subject to the following conditions:

(a) for claims not exceeding Rs.10 crore the insurance broker may undertake claims consultancy provided such claim does not emanate from a policy, which has been placed by the same insurance broker.

(b) the insurance broker shall inform the Authority within 30 days of acceptance of such claims consultancy by providing details such as name of the client, place of risk, name of the insurer, name of the distribution channel, if any, amount of claim, date of occurrence of loss, mandate obtained from the client for the claims consultancy;

(c) for claims exceeding Rs. 10 crores the insurance broker may undertake claims consultancy with the prior approval of the Authority.

(d) The application for seeking prior approval under Regulation 28 (1) (c) shall accompany the details such as name of the client, place of risk, name of the insurer, name of the insurance intermediary through whom the policy was originally placed, the reason for not providing the claims assistance to the client by the other intermediary, amount of claim, date of occurrence of loss, mandate obtained from the client for the claims consultancy.

(e) before offering the claims consultancy, the insurance broker shall obtain a written mandate from the client to represent the client with the insurer concerned for the claim for which consultancy has been sought by the client and offered by the insurance broker.

(f) the insurance broker may charge fee for claims consultancy services as may be mutually decided between the insurance broker and the client. However, such fee shall not be expressed as a percentage of the claim.

(g) the insurance broker shall, in all their dealings with such clients, be governed by the provisions of Code of Conduct as specified in Schedule I – Form H and Schedule I –Form I, as applicable, of these regulations.

(h) Any dispute between two or more insurance brokers arising out of such claims consultancy arrangements shall, in the first instance, be considered by the Insurance Brokers Association of India (IBAI) and thereafter the IBAI shall forward such dispute together with its recommendation to the Authority for final disposal.

(i) The Authority will review and decide the norms regarding claims consultancy from time to time.

29. Board Approved Policy for comparison and distribution of insurance products -

(1) Every Insurance broker shall have a Board approved policy on the manner of soliciting insurance policies. The Board approved Policy, amongst others, shall include the approach to be followed by the Insurance broker in having multiple tie-ups, type of products sold, mode of solicitation, grievance redressal mechanism, reporting requirements and any other item with regard to different business segments.

(2) The Board of the Insurance Broker shall review the same atleast once in three years.

30. Code of conduct for Insurance brokers –

(1) Every insurance broker shall abide by the Code of Conduct as specified in Schedule I – Form H of these regulations.

(2) In case of a Composite Broker or a reinsurance broker, he shall abide by the additional Code of Conduct specified in Schedule I – Form I of these regulations.

31. Internal control and systems —

(1) Every insurance broker shall ensure that a proper system of internal audit is in place and that their internal controls and systems are adequate for the size, nature and complexity of its business.

(2) In case of reinsurance and composite brokers it is mandatory that the insurance broker shall have internal audit systems and designate a compliance officer who is an employee of the insurance broker.

(3) Without prejudice to the above, it is mandatory for an insurance broker who in a financial year earns more than rupees five crore remuneration (including reward) to have a designated Compliance Officer who will be responsible for the internal controls and systems.

32. Co-broking

(1) Two or more registered insurance brokers can jointly handle the broking of insurance requirements of any client with the written consent of the client.

(2) It is open to a client to appoint in writing more than one insurance broker to jointly handle the broking of its insurance requirements depending on the skills that the insurance brokers may bring to the activity and to decide the manner in which the remuneration or fee payable on the business may be shared among them.

(3) In such a situation the registered insurance brokers shall enter into Terms of Business Agreement for providing insurance broking services to the specified client and the Agreement shall include, amongst other things, the manner defining the duties and responsibilities of each registered insurance broker, the manner of sharing of remuneration or fee among themselves, the reason for providing insurance broking services jointly.

(4) The manner in which the remuneration is shared among the co-brokers shall be disclosed to the insurer.

Direct Co-broking

(5) Each of the direct insurance co-brokers shall be insurance brokers who are holding valid certificate of registration in the class of business concerned and each co-broker shall be responsible to ensure compliance with the co-broking provisions and guidelines issued by the Authority from time to time.

(6) In any case, the total of remuneration shared among the insurance brokers together shall not be more than the limits specified in regulation 26.

(7) The insurer will be guided by the instructions of the client with regard to payment of remuneration to each co-broker for their share.

(8) Co-broking is not permitted for individual and retail lines of insurance business.

Reinsurance Co-broking

(9) Each of the co-brokers on a reinsurance placement shall also be responsible to ensure that these regulations are complied with by themselves and any foreign brokers engaged by them.

(10) Where a reinsurance placement is co-broked with a foreign reinsurance broker, the registered broker in India shall only use reinsurance co-brokers who agree to comply with the requirements of these guidelines and shall be responsible to secure compliance with these regulations or other guidelines to the extent applicable, by the foreign reinsurance co-broker.

(11) The insurer will be guided by the instructions of the client with regard to payment of remuneration to each co-broker for their share or to the lead co-broker who will then be responsible to pay the other co-brokers.

(12) The name and other particulars of the foreign reinsurance co-broker shall be disclosed to the insurer.

33. Segregation of insurance money —

(1) The provisions of section 64VB of the Act shall continue to determine the question of assumption of risk by an insurer.

(2) In the case of reinsurance contracts, it may be agreed between the parties specifically or as part of international market practices that the registered reinsurance broker or composite broker can collect the premium and remit to the reinsurer and/or collect the claims due from the reinsurer to be passed on to the insurer. In these circumstances the money collected by the registered insurance broker shall be dealt with in the manner specified in Schedule II – Form U of these regulations.

34. Maintenance of books of account, records, etc. –

(1) Every insurance broker shall prepare for every financial year –

(a) a balance sheet or a statement of affairs as at the end of each accounting period;

(b) a profit and loss account for that period;

(c) a statement of cash/fund flow (direct method);

(d) Additional statements on insurance broking business as may be required by the Authority.

Note: For purposes of this regulation, the financial year shall be a period of 12 months (or less where a business is started after 1st April) commencing on the first day of the April of an year and ending on the 31st day of March of the year following, and the accounts shall be maintained on accrual basis.

(2) Every insurance broker shall submit to the Authority, a copy of the audited financial statements as stated in sub-regulation (1) along-with the auditor’s report thereon within 30 days of holding of the annual general meeting or before 30th September every year whichever is earlier along with the remarks or observations of the auditors, if any, on the conduct of the business, state of accounts, etc., and a suitable Explanation on such observations shall be appended to such accounts filed with the Authority.

(3) Every insurance broker shall, within ninety days from the date of the Auditor’s report take steps to rectify any deficiencies, made out in the auditor’s report and inform the Authority accordingly.

(4) All the books of account, statements, document, etc., shall be maintained at the head office of the insurance broker or such other branch office as may be designated by them and notified to the Authority, and shall be available on all working days to such officers of the Authority, authorised in this behalf by it for inspection.

(5) All the books, documents, statements, contract notes etc., referred to in this regulation and maintained by the insurance broker shall be retained for a period of at least seven years from the end of the year to which they relate. However the documents pertaining to the cases where claims are reported and the decision is pending for a decision from courts, the documents are required to be maintained till the disposal of the cases by the court. In the case of reinsurance brokers, all other documents are required to be maintained till its natural expiry.

(6) There shall be a note to their financial statements providing the details of all the incomes received from insurers and insurer’s group companies, insurer-wise, by the insurance broker and also the details of payments received by the group companies and/or associates and/or related parties of the insurance broker from any insurer and the details thereof.

(7) A certificate confirming the compliance of these regulations in the format given in Schedule II – Form UA shall also be submitted by the auditor.

(8) Every insurance broker shall submit to the Authority the details of statutory auditors engaged by them along with the audited accounts as per Schedule II – Form V of these regulations. The statutory auditors of the insurance broker shall be appointed for a maximum continuous duration of up to 5 years.

(9) Every insurer who is engaging the services of an insurance broker shall file with the Authority a certificate separately for all such insurance brokers in case the remuneration and other payments made to insurance broker exceeds the limits stipulated, in the format given in the Schedule II – Form W to be signed by the CEO and CFO of the insurer. A similar certificate from the Principal Officer and CFO (or its equivalent) of the insurance broker certifying that the remuneration and other payments received by the insurance broker from the insurer shall be filed with the Authority as given in Schedule II – Form W.

35. Ceiling on business from single client –

(1) The business of the insurance broker shall be carried in such a manner that, not more than 50 percent of the remuneration shall emanate from any one client in a financial year.

Note: For the purposes of this regulation, the term “client” shall include, in the case of a firm or a company, an associate or a subsidiary or a group concern under the same management. The definition of “group” shall have the same meaning as defined in IRDAI (Investment) Regulations, 2016.

(2) The percentage of remuneration as specified in sub-regulation (1) will not include reinsurance remuneration as well as remuneration towards insurance business emanating from a Government body or Public sector undertaking.

(3) The decision of the Authority as to whether a company, a business or an organisation is under the same management shall be final.

(4) An insurance broker shall furnish a certificate duly certified by a Chartered Accountant confirming compliance with this regulation every year along with the audited accounts.

36. Outsourcing of activities by insurance broker –

An Insurance Broker can outsource the activities given in Schedule II - Form X based on a Board approved policy.

37. Single broking registration to one corporate group and dealings with Group companies

(1) The Authority shall ordinarily issue only one certificate of registration in the categories of Direct Broker (Life) and/ or Direct Broker (General) and/ or Direct Broker (Life & General) and/ or Reinsurance Broker or Composite Broker to a corporate group. For the purposes of these regulations, the group shall have the same meaning as defined in IRDAI (Investment) Regulations, 2016.

(2) Promoters of the insurance broker shall give an undertaking that none of the clients within promoter group will be compelled for their insurance requirements.

(3) There must be mandatory disclosures of related party transactions with the promoter group in their audited accounts and balance sheet as per accounting standards.

(4) For insurance brokers promoted by Corporate Houses having an insurance company within their group, not more than 25 per cent of the insurance premiums (separately for life and for general (incl. health) insurance business)handled by the insurance broker in any financial year shall be placed with the insurance company within the promoter group. The broker shall establish internal machinery to monitor this on an ongoing basis.

(5) The insurance brokers falling under this category shall have to abide by the following conditions:

1. A) Obligations of the Insurer:

(i) The insurer within the group should give an undertaking that –

(a) it will not pay higher remuneration or reward to the insurance broker within the group compared to what is payable to other insurance brokers for the same class of insurance or insurance product;

(b) it will not quote terms to the insurance broker within the group, that are more favourable than the terms quoted to other insurance brokers on the same proposal for insurance; and

(c) it will not design special insurance products for sale exclusively through the insurance broker.

(d) it will file an audit certificate on compliance with this undertaking annually with the audited accounts of the insurer;

1. B) Obligations of the Insurance Broker:

(i) The broker shall make an explicit disclosure of it being a sister company of the insurer within the same promoter group, in all its stationary used for communication with clients and in all publicity materials and at the offices of the broker.

(ii) Where the insurance broker recommends a product and quotes rates and terms offered by an insurer within the same promoter group, the insurance broker shall inform the client about the logic in support of its recommendation and also inform the client about the next best product, rates and terms offered by an insurer not part of the promoter group.

(iii) It shall be mandatory for the insurance broker to disclose Related Party transactions with the insurance company belonging to the promoter group in its audited accounts and balance sheet as described in the Accounting Standards.

1. C) Obligations of both the Insurer and the Insurance Broker

(i) The insurance company and the insurance broker shall maintain arm’s length distance between themselves. More explicitly, no employee or director of the insurance broker shall be a director, employee, or agent of the insurance company.

(ii) The insurance broker shall not offer loans or other facilities or incentives to officers or employees of the insurer within the group and vice versa.

For this purpose, “Group” shall be as defined in the IRDAI (Investment) Regulations, 2016 and Guidelines issued thereunder.

38. Reinsurance / Composite brokers sharing of Brokerage with a foreign broker for the placement of risks –

(1) In case any insurer/ reinsurer registered in India, utilizes the services of any reinsurance broker for the placement of reinsurance of Indian risks abroad, such placement shall be through a reinsurance or composite broker registered by the Authority only.

(2) For the purposes of sub-regulation (1) above, a registered reinsurance or composite broker may utilize the services of a foreign broker for placement of reinsurance with insurers or reinsurers outside India.

(3) For the purposes of sub-regulation (2) above, the reinsurance/composite brokers registered with the Authority shall not share more than 50% of the remuneration with the foreign insurance broker for the services obtained from them.

39. Filing of Returns —

(1) Every insurance broker shall before 31st October and 30th April each year furnish to the Authority the following certificates duly certified by the auditor.

(a) A certificate to the effect that the insurance broker is maintaining required capital, the insurance broker is not engaged in any other business other than insurance broking and also maintains required net-worth as required under regulations 19 and 22, as per Annexure I-A of these regulations;

(b) A certificate to the effect that the insurance broker is maintaining a deposit in compliance of regulation 23, as per Annexure I-B of these regulations;

(c )A certificate to the effect that a Professional Indemnity Policy is in force in compliance of regulation 24, as per Annexure I-C of these regulations;

(d) A certificate confirming that the insurance broker has received the remuneration as per the limits prescribed in the regulation 26, as per Annexure I-D of these regulations;

(e) A certificate in case of a reinsurance broker or a composite broker to the effect that the insurance broker is complying with provisions of regulation 33 and is maintaining a separate Insurance Bank Account and the monies lying in the said account are not used for any purposes other than as specified in the regulations, as per Annexure I-E of these regulations.

(f) A certificate in case of a reinsurance broker or a composite broker on the amount of remuneration or fees earned during the period and any transfers made to any other account as per Annexure I-F of these regulations.

(2) the insurance brokers shall file periodical returns, without fail within the time specified, as per the formats/ returns prescribed under Authority’s Business Analytical Project. Any failure to comply with this regulation without sufficient reason beyond 15 days shall attract penal action as specified under these regulations;

(3) any false or wrong certification or concealment of facts in the certificates submitted to Authority shall attract penal action as specified under these regulations.

40. Disclosures to the Authority —

(1) An insurance broker shall disclose to the Authority on their own any material change which has a bearing on their certificate of registration within 30 days of such change;

(2) an insurance broker shall disclose to the Authority, as and when required by it, in any event not later than thirty days of a requisition, the following information, namely –

(a) their responsibilities with regard to the placement of an insurance or reinsurance contract;

(b) any change in the information or particulars previously furnished, which have a bearing on the registration granted to them;

(c) the names of the clients whose insurance portfolio they manage or have managed;

(d) any other requirement or information specified by the Authority from time to time.

Provided that in case of a person specified in regulation 2(1)(m)(iv), the Authority may call for and obtain such information as it deems fit.

(3) In any case, an insurance broker shall have to take the prior approval of the Authority for the following;

(a) Change of Principal Officer;

(b) Change of Director(s)/Partner(s) provided that in the event of resignation of the Director / Partner, the Authority may be informed;

(c) Change in name of the company;

(d) Change in place of corporate/registered office, if such change is not within same city in which case the same may be informed;

(4) An insurance broker shall furnish to the Authority the following information as and when there is a change/addition to the information furnished previously to the Authority.

(a) Opening/closing of branch offices;

(b) List of broker qualified persons and point of sales persons;

(c) Claim under the professional indemnity policy;

(d) Acquiring of immovable property;

(e) Change in principal place of business within same city;

(5) The Authority may from time to time require the insurance broker to furnish information/data/documents in the manner as may be specified in the matter.

(6) Failure to comply with this regulation shall attract penal action, in accordance with the provisions of regulation 48 being taken against the insurance broker.

Explanation:

(1) For the purpose of this regulation, `material change’ means any change which has a bearing on consideration of their application under regulation 8 of these regulations.

(2) For the purpose of this regulation, the `principal place of business’ means location of head office of a business where the books and records are kept and/or management works.

41, Amalgamation and Transfer of business

1) No insurance broker shall undertake any scheme of amalgamation or merger & acquisition or transfer of business except in accordance with these Regulations.

2) No scheme of amalgamation shall be implemented by an insurance broker without the prior written approval of the Authority.

3) No scheme of transfer of business whether wholly or partly shall be implemented by an insurance broker where notwithstanding such transfer, the transferor continues to act as an Insurance broker under the Regulations, unless the prior written approval of the Authority is obtained. However, no transferor shall act as a broker for such transferred business beyond six months.

4) No scheme of transfer of business shall be implemented by an Insurance broker where such transfer results in voluntary surrender of registration by the transferor, unless the prior written approval of the Authority is obtained.

5) The process for seeking approval of the Authority is indicated at Schedule II – Form Y of these regulations.

42, Authority’s power to inspect —

(1) The Authority may appoint one or more of its officers as “inspecting authority” to undertake inspection of the premises of the insurance broker to ascertain and see how the business is carried on, and to inspect the books of accounts, records and documents of the insurance broker for any of the purposes specified in sub-regulation

(2) The purposes referred to in sub-regulation (1) may be as follows, namely : —

(a) to ensure that the books of account are being maintained in the manner required;

(b) to ensure that the provisions of the Act, rules, regulations are being complied with;

(c) to investigate the complaints received from any insured, any insurer, other insurance brokers or any other person on any matter having a bearing on the activities of the insurance broker; and

(d) to investigate the affairs of the insurance broker suo motu in the interest of proper development of insurance business or in policyholders’ interest.

(3) The manner in which the inspection will be conducted is specified in Schedule II – Form Z of these regulations.

(4) The list of documents required for the inspection to be maintained by the insurance broker and to be provided at the time of inspection shall be as specified by the Authority.

43, Appointment of investigator by the Authority –

(1) The Authority may appoint a chartered accountant or an actuary or any qualified and experienced individual in the field of insurance to investigate the books of accounts or the affairs of the insurance broker, if the Authority is of the view that the affairs of the insurance broker are not in the interest of the policyholder or are not in compliance to the provisions of the Insurance Act, Regulations, circulars, guidelines, etc .

Provided that the person so appointed shall have the same powers of the inspecting authority as are mentioned in regulation 42 and the obligations of the insurance broker in regulation 42 shall be applicable to the investigation under this regulation.

Explanation- For the purposes of this regulation the expression “chartered accountant” shall have the same meaning as given in Section 141 of the Companies Act, 2013 (18 of 2013), as amended from time to time, and the expression ‘actuary’ shall have the same meaning as given in section 2(1)(a) of The Actuaries Act, 2006 (35 of 2006).

(2) The expenses and costs of such an investigation shall be recovered by the Authority from the insurance broker whose affairs had been caused to be investigated.

Chapter – IV

ONLINE SALES, TELEMARKETING AND DISTANCE MARKETING

44, Sale of Insurance Online –

(1) Insurance brokers may enter into an agreement with insurers for sale of insurance products online by linking to the web portals of the insurers.

(2) The sale of insurance online by Insurance Brokers shall be as per IRDAI (Insurance Web Aggregators) Regulations, 2017 and Guidelines on Insurance e-commerce issued by the Authority in so far as they are applicable.

45, Sale of Insurance by tele-marketing mode–

(1) The sale of insurance where leads are generated through online and off-line mode and completed through tele-marketing mode by Insurance Brokers shall be as per IRDAI (Insurance Web Aggregators) Regulations, 2017 issued by the Authority and the Insurance Broker can undertake outsourcing activities only to the extent of tele-calling as allowed under IRDAI (Insurance Web Aggregators) Regulations, 2017 in so far as they are applicable.

46, Sale of Insurance through distance marketing mode –

(1) The sale of insurance where leads are generated through online and offline and completed through distance marketing mode by Insurance Brokers shall be as per IRDAI (Insurance Web Aggregators) Regulations, 2017 issued by the Authority and the Insurance Broker can undertake outsourcing activities only to the extent of tele-calling as allowed under IRDAI (Insurance Web Aggregators) Regulations, 2017 in so far as they are applicable.

Chapter – V

APPROACH IN CASE OF NON-COMPLIANCE OF REGULATIONS

47, Action against a person acting as an insurance broker without a valid certificate of registration—

(1) Notwithstanding and without prejudice to initiation of any criminal proceedings against any person, who acts as an insurance broker without holding a valid certificate of registration issued under these regulations, the Authority may invoke against such a person penal action under the Act.

(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 initiated by the Authority against such 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 a penalty which may extend to ten lakh rupees.

48, Penalty for certain violations / breaches

(1) In case a registered insurance broker violates any of the provisions of Insurance Act, 1938, IRDA Act, 1999 and Rules and Regulations made there under, any circular/guidelines/orders issued by the Authority from time to time, the Authority may issue such order imposing appropriate penalty depending on the nature/gravity of violation.

(2) The insurance broker, if aggrieved by the decision of the Authority, may appeal to the Securities Appellate Tribunal.

49, Suspension or Cancellation of certificate of registration with notice –

(1) The certificate of registration of an insurance broker may be suspended or cancelled after due notice and after giving them a reasonable opportunity of being heard if they —

1. a) violate the provisions of the Insurance Act,1938 (4 of 1938), Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) or rules or regulations, made thereunder as amended from time to time;
2. b) fail to furnish any information relating to their activities as an insurance broker as required by the Authority;
3. c) fail to comply with the directions issued by the Authority;
4. d) furnish wrong or false information; or conceals or fails to disclose material facts in the application submitted for obtaining a registration or during the validity of certificate of registration;
5. e) do not submit periodical returns as required by the Authority;
6. f) do not co-operate with any inspection or enquiry conducted by the Authority;
7. g) fail to resolve the complaints of the policyholders or fails to give a satisfactory reply to the Authority in this behalf;
8. h) indulge in rebates or inducements in cash or kind to a client or any of the client’s directors or other employees or any person acting as an introducer except as permitted under these regulations;
9. i) are found guilty of misconduct or their conduct is not in accordance with the Code of Conduct specified in Schedule I – Form H and Schedule I – Form I, whichever is applicable;
10. j) fail to maintain the capital, net-worth and deposit requirements in accordance with the provisions of regulations;
11. k) fail to pay the fees, penalties imposed or the reimbursement of expenses under these regulations;
12. l) violate the conditions of certificate of registration; m)do not carry out their obligations as specified in the regulations;
13. n) undertakes multi-level marketing for soliciting and procuring of insurance policies;
14. o) carry on the business with a Principal Officer who does not acquire practical training and pass the examination within the stipulated period as specified in regulations;
15. p) the Authority is of the view that the establishment of an insurance broker is only to divert funds within a group of companies or their associates, and the fact is established after due enquiries made by the Authority.

50, Suspension or Cancellation of certificate of registration without notice —

(1) The certificate of registration of an insurance broker may be suspended or cancelled without notice, if they

(a) violate any one or more of the requirements under the code of conduct specified in Schedule I – Form H and Schedule I – Form I, whichever is applicable;

(b) are found guilty of fraud, or is convicted of a criminal offence;

(c) commit such defaults, which require immediate action in the opinion of the Authority, provided that the Authority has communicated the reasons for the cancellation in writing;

(d) have not commenced the business within six months of being granted a registration.

(2) in case the certificate of registration of an insurance broker is suspended without notice, such certificate of registration shall not be cancelled unless an enquiry has been held in accordance with the procedure specified in regulation 52.

51, Publication of order of suspension —

(1) The order of suspension or cancellation of the certificate of registration made under regulation 49 or regulation 50, shall be displayed on website of the Authority and communicated to the insurers, so that registration of new business by the suspended insurance broker is stopped forthwith by the insurers.

(2) On and from the date of suspension or cancellation of the certificate of registration, the insurance broker, shall cease to function as an insurance broker.

(3) An insurance broker however shall continue to service the contracts already concluded through them for a period of six months within which he shall make suitable arrangements for having the contracts attended to by another registered insurance broker.

52, Manner of holding of enquiry after suspension of certificate of registration of the insurance broker—

(1) The certificate of registration of an insurance broker shall not be cancelled unless an enquiry has been conducted in accordance with the procedure specified in this regulation.

(2) For the purpose of holding an enquiry under this regulation, the Authority may appoint an enquiry officer within 15 days of the issue of the suspension order;

(3) The enquiry officer shall issue a notice to the insurance broker at the registered office or the principal place of business of the insurance broker, as the case may be, calling for all information / data as deemed necessary to conduct the enquiry and grant the insurance broker a time limit of 15 days from date of receipt of the notice, for submission of such information / data called for;

(4) The insurance broker may, within fifteen days from the date of receipt of such notice, furnish to the enquiry officer a reply to the notice together with copies of documentary or other evidence relied on by them or sought by the enquiry officer;

(5) The enquiry officer shall give a reasonable opportunity of hearing to the insurance broker to enable them to make submissions in support of their reply made under sub-regulation (4) above;

(6) The insurance broker may either appear in person or through any person duly authorised by them to present their case, provided however that the prior approval of the enquiry officer is obtained for the appearance of the ‘authorised person’;

(7) If it is considered necessary, the enquiry officer may require the Authority to present its case through one of its officers;

(8) If it is considered necessary, the enquiry officer may call for feedback/information from the insurer or any other related entity during the course of enquiry;

(9) If it is considered necessary, the enquiry officer may call for additional papers from the insurance broker;

(10) The enquiry officer shall make all necessary efforts to complete the proceeding at the earliest but in no case beyond 60 days of the commencement of the enquiry

Provided that in case the enquiry cannot be completed within the prescribed time limit of 60 days as mentioned above; the enquiry officer may seek additional time from the Authority stating the reason thereof;

(11) The enquiry officer shall, after taking into account all relevant facts and submissions made by the insurance broker, submit a report to the Authority within 30 days of the completion of the enquiry proceedings.

53, Action to be taken after the receipt of the enquiry report. —

(1) On receipt of the report from the enquiry officer, the Authority shall consider the report and issue a show-cause notice to the insurance broker if the contents of the report warrant a cancellation of the registration granted to them;

Provided that no such notice is required, in case the provisions of regulation 50 are attracted.

(2) The insurance broker shall within twenty-one days of the date of receipt of the show cause notice send a reply to the Authority.

(3) The Authority after considering the reply to the show cause notice shall, as soon as possible, but not later than thirty days from the receipt of the reply, pass such an order as it deems fit.

Provided, however, that where the insurance broker on serving of the notice under this regulation fails to furnish any reply within the stated period, the Authority may after the expiry of such time proceed to decide the case on merit and pass such an order as it deems fit.

(4) The Authority shall send a ‘final order of the Authority’ made under sub-regulation (3) to the insurance broker.

54, Procedure for Cancellation of certificate of registration —

(1) Authority shall issue the final order for cancellation of the certificate of registration of the insurance broker and they shall cease to act as an insurance broker from the date of the final order.

(2) The process of notification of the cancellation of certificate of registration of the insurance broker is outlined in regulation 55.

(3) The Authority in such an event may pass such order as it thinks fit for the disposal of the deposit of the insurance broker made under regulation 23.

(4) An insurance broker whose certificate of registration has been cancelled shall continue to service the contracts already concluded through them for a period of six months from the order of cancellation of certificate of registration within which period they shall make suitable arrangements for having the contracts attended to by another registered insurance broker.

(5) The registered insurance broker who agrees to take over the obligations of policy service from the insurance broker whose certificate of registration has been cancelled shall submit their request to the insurer for serving the policies / contracts through the term.

(6) The registered insurance broker on obtaining the approval from the insurer, for take-over of the obligations of policy service, can collect remuneration on current contracts in vogue with prospective effect from the date of service of the contracts.

(7) The insurer shall pay remuneration / policy service, on current contracts in vogue with prospective effect from the date of allotment of service of the contracts to the insurance broker to whom the insurer has given the authority.

55, Publication of order on cancellation of certificate of registration —

The order of cancellation of the certificate of registration made under sub-regulation (3) of regulation 53, shall be published in one daily newspaper in the English language and one newspaper in the regional language as the Authority may consider fit, in addition to display on the website of the Authority.

56, Effect of cancellation of certificate of registration —

(1) On and from the date of suspension or cancellation of the certificate of registration, the insurance broker, shall cease to act as an insurance broker.

(2) An insurance broker however shall continue to service the contracts already concluded through them for a period of six months within which suitable arrangements shall be made by them for having the contracts attended to by another registered insurance broker.

(3) Another registered insurance broker who agrees to take over the obligations of policy service can collect remuneration on current contracts which were not collected earlier from insurers, provided the insurance broker undertakes to service the policies through its term.

Chapter – VI

MISCELLANEOUS

57, Voluntary Surrender of certificate of registration –

(1) An Insurance Broker registered under these regulations may make an application to the Authority for surrender of their certificate of registration. The Authority may consider such application on merit.

(2) Upon acceptance of the application for surrender made by the insurance broker, the Authority may pass an order for surrender of certificate of registration.

(3) The insurance broker whose certificate of registration is surrendered and accepted by the Authority shall have to make arrangements as specified in regulation56.

(4) The documents/information required to be submitted for surrender of certificate of registration is as per Schedule III – Form AA to these regulations.

58, Repeal and Savings:

(1) Every Insurance Broker granted Licence or Certificate of Registration for acting as an insurance broker under the earlier regulations shall be valid under these regulations.

(2) Existing Insurance Brokers shall ensure compliance of the provisions relating to paid-up equity capital and net-worth requirements within a period of two years from the date of notification of these regulations and other requirements specified in these regulations within six months from the date of notification of these regulations.

(3) However, the Authority may, on an application made to it by an existing insurance broker, for valid reasons, grant a further period of six months time to comply with the Regulations.

(4) ***.

(5) Every undertaking shall be accompanied by: (1) A certified copy of resolution passed by the Board of Directors confirming the compliance of sub-regulation (2) above; (2) Where applicable, certified copy of the agreement / Joint venture Agreement where amendments to the agreement / joint venture agreement have been carried out to give effect to the provisions of the Act.

59, General —

(1) From the date of notification of these regulations no person can function as an insurance broker unless a certificate of registration has been granted to them by the Authority under these regulations or under any other regulations which was in force.

(a) Insurance brokers including the insurance brokers registered under the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013 shall be governed by the provisions of the Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2018 from the date of notification of these regulations.

(b) The licenses issued under the provisions of the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013 shall continue to be valid till the expiry of the license provided there are no violations of any of the provisions of the Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2018 from the date of notification of the regulations.

(c) Applications for grant of license or renewal of license, received at the Authority prior to notification of these regulations shall be governed by the provisions of Insurance Regulatory and Development (Insurance Brokers) Regulations, 2013 till the final consideration / disposal of such applications.

(d) Proceedings / Departmental enquiry / Departmental inspection which have been initiated against the insurance broker under the provisions of Insurance Regulatory and Development (Insurance Brokers) Regulations, 2013 shall be governed by the provisions of respective regulations till their final disposal.

(2) Any disputes arising between an insurance broker and an insurer or any other person either in the course of their engagement as an insurance broker or otherwise may be referred to the Authority by the person so affected; and on receipt of the complaint or representation, the Authority may examine the complaint and if found necessary proceed to conduct an enquiry or an inspection or an investigation in terms of these regulations.

(3) Power to remove difficulties and issue clarifications –

In order to remove any doubts or the difficulties that may arise in the application or interpretation of any of the provisions of these regulations, the Chairperson of the Authority may issue appropriate clarifications or guidelines as deemed necessary.

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