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2) Insurance Brokers

INSURANCE BROKERS ASSOCIATION OF INDIA (IBAI) is the


IRDA-recognized apex body of all licensed insurance brokers in India.
An insurance broker can save you, the insurance buyer, time, money and
worry. Insurance is a wasted purchase if it doesn't provide cover when
disaster strikes. Many people put their livelihoods at stake, under-insure or
over-insure, because they did not seek the right advice.
Whether you are arranging car, house, life or business insurance, brokers
represent you, the buyer. They shop around, provide advice, arrange the
insurance and help with claims. It's a broker's job to provide you with the
most comprehensive and appropriate protection to suit your needs.

The functions of a broker shall include any one or more of the following:

Obtaining detailed information of the client's business and risks faced

Familiarising himself with the client's business so that this can be explained to an
insurer and others;

Rendering advice on appropriate insurance cover and terms;

Maintaining detailed knowledge of available insurance markets, as may be


applicable;

Submitting quotation received from insurer/s for consideration of a client;

Acting promptly on instructions from a client and providing him written


acknowledgements and progress reports;

Providing services related to insurance consultancy and risk management;

Assisting in the negotiation of the claims; and

Maintaining proper records of claims;

A company desirous to become a broker must decide the area of operation i.e. Life
Insurance, General Insurance or Reinsurance.

A broker represents the client in contrast to agents who represents insurers.

A broker may act as Direct or Composite broker.

The company must appoint a Principal Officer to carry out the functions as a
broker.

The role of broker is not just limited to selling of policies but also to guide the
insured according to his need.

An application by a person for grant of a licence as an insurance broker shall be


made in Form A to the Authority.

An application, not complete in all respects and not conforming to the instructions
specified in the Form A and these regulations, shall be rejected.

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.
9. The broker must not suffer from any disqualification and must fulfill all criteria
related to qualification, training and capital requirements.

The broker must fulfill the following capital eligibility criteria:


(a) Direct broker - fifty lakhs
(b) Reinsurance broker - two hundred lakhs
(c) Composite broker - two hundred and fifty lakhs

The Authority on being satisfied that the applicant fulfills 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 license 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.

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.

An insurance broker may, within thirty days before the expiry of the license, make
an application in Form A to the Authority for renewal of license.

Every applicant eligible for the grant of a licence shall pay such fees in such a
manner and within such a period as specified in Schedule II.

The Insurance Broker


Difference between Insurance Agent and Broker
Client - Broker Relationship
INSURED /
CLIENT

Relationshi
p

INSURANCE
BROKER

Transaction

INSURANCE
COMPANY A
INSURANCE
COMPANY B
INSURANCE
COMPANY C

Insurer - Agent Relationship


INSURANCE
COMPANY

Relationshi
p

INSURANCE
AGENT

Transaction

INSURED /
CLIENT

3) Surveyor / Loss Assessor


To examine the claim and assess the actual
loss suffered
To submit a report for the consideration of the
insurance company

Possess technical qualifications as specified by


the Authority

Has furnished evidence of payment of fees for


grant of license, depending upon the
categorisation;

Has undergone a period of practical training,


not exceeding 12 months, as contained in
Chapter VII of these regulations

4) Third Party Administer (TPA)


Arises mainly out of Managed Health Care
business.
Only companies registered under The
Companies Act, 1956 are allowed to act as
TPA
IRDA is finalising regulations governing TPAs.
New Policy data maintained
Identity cards and guide book detailing
claim procedures issued within 7 days
24 hr call centres (directs insured's to
suitable hospital)
Funds provided by Insurance Co. to settle
claims of hospital
Fee = 5.5% of premium ( pd by insurer

5) Bancassurance
Tie up with banks to sell insurance
products
Routes of participation include
Providing fee based insurance service
without risk participation
Investing in Insurance Co. for providing
infrastructure and service support
Set up joint venture insurance company
with risk participation
Advantage of increasing profits without
investing huge capital ( fee - based income)
Insurance Co. gets readymade consumer
database