Insurance Broker: How to become an insurance broker? How to get a license from IRDAI, and how much can you earn?

If you want to make money in the insurance sector and play a vital role as a liaison between insurance companies and customers, becoming an insurance broker can be a great option. However, certain qualifications and procedures are required for this. Let's find out what they are.

Who is an insurance broker?
An insurance broker is a person or organization that facilitates the buying and selling of insurance, provides advice, and settles claims between insurance companies and customers. They do this for a fixed fee or commission.

The Insurance Regulatory and Development Authority of India (IRDAI) divides brokers into three main categories:

1. Direct Broker – who helps customers obtain insurance policies in India.

2. Reinsurance Broker – who advises insurance companies on their insurance (reinsurance) arrangements, whether in India or abroad.

3. Composite Broker - One who performs both direct and reinsurance functions.

Who can register as an insurance broker?
To become an insurance broker, it is necessary to register as a company, LLP, or cooperative. Individuals cannot apply directly; this work can only be done through a legal entity.

How much capital is required?
There is a minimum capital requirement for the license. For example,

₹75 lakh for a direct broker
₹4 crore for a reinsurance broker
₹5 crore for a composite broker
In addition, maintaining a net worth is mandatory to ensure the company's financial position remains strong.

Fixed Deposits Are Also Required
Before becoming an insurance broker, a certain amount must be kept in the bank as a fixed deposit. This is ₹10 lakh for a direct broker. For reinsurance and composite brokers, the amount is 10% of their capital.

Office and Staffing
IRDAI also ensures that applicants have adequate office space, IT infrastructure, and trained staff to properly serve clients.

Qualifications and Training
At least two qualified individuals (Broker Qualified Persons) must have passed the training and examinations prescribed by IRDAI. Furthermore, the Principal Officer (the company's chief officer) must also be trained and qualified.

Application Process
Applying for a license is done online only on the IRDAI website www.irdabap.org.in. The application is made in Form B (Schedule-I) and is accompanied by the required documents and fees.

Fees vary by segment.

Direct Broker - ₹25,000

Re-insurance Broker - ₹50,000

Composite Broker - ₹75,000

Upon approval, an additional registration fee must be paid. Required documents include the company's MOA and AOA. Additionally, details of key officers and directors, a list of qualified employees (Form F), bank and auditor information, a fit and proper certificate (Form G), and proof of infrastructure are also required.

License Validity and Renewal
The insurance broker license issued by IRDAI is valid for three years. Renewal of the license is required before the expiry date. Applications for this must be submitted 30 days before the expiration date.

Other Required Conditions
The broker must always comply with IRDAI regulations. Customer complaints must be resolved within 14 days. Multi-level marketing or false advertising is not permitted. Every broker is required to obtain professional indemnity insurance (PII) to protect them in the event of a mistake or loss.

Direct Insurance Broker Earnings
A direct broker helps clients obtain insurance policies (such as life insurance, health insurance, motor insurance, etc.). In return, they receive a brokerage commission from the insurance company.

Commission Rates (On Average)
Life insurance ranges from approximately 2% to 7.5% on the first year's premium. General insurance (motor, health, property) typically ranges from 10% to 15%. For corporate policies or large companies, commissions vary depending on the deal, but the volume is much higher.

That is, if you secure insurance premiums worth ₹10 crore annually, you could earn up to ₹1 crore in commission income at an average rate of 10%. However, this amount may decrease after deducting your expenses and employee salaries.

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