Insurance Intermediary Certificate Renewal IFSC |

Insurance Intermediary Certificate Renewal Process IFSC

Introduction

Renewing the certificate for Insurance Intermediaries (IIIOs) is a crucial process that involves specific procedures and guidelines outlined by the Authority. This article aims to provide a clear and concise overview of the renewal process, offering step-by-step instructions and relevant information for IIIOs. By following these guidelines, IIIOs can ensure a seamless renewal process for their certificate.

Timely Submission of Renewal Application

To initiate the renewal process, IIIOs must submit their application for renewal along with the specified renewal fee at least ninety (90) days before the certificate's expiry date. Failing to meet this deadline may result in additional penalties.

If the renewal application does not reach the Authority thirty (30) days before the registration ceases to remain in force, the IIIO will be required to pay an additional fee as a penalty. However, as long as the application reaches the Authority before the registration expiration date, it will still be considered.

In case the IIIO fails to submit the renewal application within thirty (30) days from the date the registration ceases to remain in force, they can still apply within a period of sixty (60) days, along with the applicable additional fee. The Authority will review the reasons for the delay and may approve the application with penalties if a satisfactory explanation is provided.

If a renewal application is received after sixty (60) days from the date the registration ceases to remain in force, it will only be considered after a lapse of twelve (12) months from the date of the late application submission. During this period, the IIIO's certificate will cease to exist, preventing them from soliciting any new business. However, the IIIO is allowed to continue servicing existing policies until their contracts expire.

Application Process and Training Requirements

To ensure a successful renewal, IIIOs must comply with Regulations 6 and 7, which apply to both initial registration and renewal. Additionally, before seeking a renewal of the certificate, the Branch Head/Principal Officer, Broker Qualified Persons, or a Specified Person of the IIIO must complete the required training as specified by the Authority.

Additional Information Requirement and Duties

During the renewal application process, the Authority may request additional information or documents from the IIIO. It is the IIIO's responsibility to provide the requested information within the specified timeframe determined by the Authority.

Authority's Decision on Renewal

Upon reviewing the renewal application and ensuring that all necessary conditions are met, the Authority will renew the certificate for an additional three (3) years. The renewal will follow the format specified in SCHEDULE-V of the regulations.

However, if the Authority cancels or rejects the renewal application, or if the IIIO surrenders the certificate, the IIIO must wait for a period of one (1) year from the effective date of cancellation, surrender, or refusal before filing a fresh application.

Consequences of Non-Renewal

In the event that the renewal application is refused by the Authority, the IIIO's ability to act as an insurance intermediary will cease from the effective date mentioned in the communication. However, the IIIO will still be responsible for providing services for existing contracts until their expiry.

During this transition period, which is either the period of expiry of current contracts or a maximum of six (6) months, the IIIO must make suitable arrangements to have the contracts attended to by another registered IIIO within the same category. The Authority may request details of such arrangements when required.

General Obligations of an IIIO

To differentiate themselves from non-registered insurance-related entities, IIIOs are obliged to include the words "Insurance Broker," "Insurance Brokers," "Insurance Broking," "Third Party Administrator," or "Surveyor or Loss Assessor" in their names. This requirement does not apply to foreign insurance intermediaries setting up branch offices in the IFSC, who can maintain their approved name by their home country regulatory or supervisory Authority.

Additionally, IIIOs must prominently display their certificate issued by the Authority in their office and include their registered name, address, registration number, granted category, and validity period of the registration in all correspondences with stakeholders. The use of any other name in correspondence, literature, or letterheads requires prior approval from the Authority.

IIIOs must commence business within one hundred eighty (180) days from the date of certificate issuance. If unable to do so, they can apply for an extension to the Chairperson of the Authority at least thirty (30) days in advance of the expiry of the given period.

No extension beyond eighteen (18) months from the date of certificate issuance will be granted by the Chairperson of the Authority.

The renewal of the certificate for IIIOs is a vital process that ensures the continuation of their insurance intermediary activities. By following the outlined procedures and guidelines, IIIOs can facilitate a smooth renewal process and avoid interruptions in their business operations. Adhering to the Authority's requirements and maintaining compliance with the regulations will contribute to the overall success of IIIOs in the insurance industry.

Requirements for Insurance Intermediary

Capital / Net-worth Requirement

PART-A:

MINIMUM CAPITAL/ NET-WORTH REQUIREMENTS FOR INSURANCE INTERMEDIARY

Category Capital/contribution

Requirement (USD) Net Worth

Requirements (USD)

Direct Insurance broker 100000 80,000

Reinsurance Broker 550,000 60% of min capital

Requirement

Composite broker 675,000 60% of min capital

Requirement

Corporate agent 75,000 75,000

Surveyor and Loss Assessor NIL NIL

Third Party Administrator 550,000 150,000

Category	Capital/contribution Requirement (USD)	Net Worth Requirements (USD)
Direct Insurance broker	100000	80,000
Reinsurance Broker	550,000	60% of min capital Requirement
Composite broker	675,000	60% of min capital Requirement
Corporate agent	75,000	75,000
Surveyor and Loss Assessor	NIL	NIL
Third Party Administrator	550,000	150,000

PART-B:

MINIMUM CAPITAL REQUIREMENTS FOR INSURANCE INTERMEDIARY

REGISTERED AS A BRANCH IN THE IFSC

Category Capital/contribution

Requirement (USD)

Direct Insurance broker 10,000

Reinsurance Broker 55,000

Composite broker 67,500

Category	Capital/contribution Requirement (USD)
Direct Insurance broker	10,000
Reinsurance Broker	55,000
Composite broker	67,500

Professional Indemnity Insurance

Every IIIO must purchase and maintain professional indemnity insurance cover throughout the validity of its Registration, as specified in SCHEDULE-V of the Regulations.

Note: In certain cases, the Authority may allow newly registered IIIOs to purchase this policy within twelve (12) months from the date of certificate issuance.
Further note: If an applicant has established an IIIO in branch form, they must comply with the professional indemnity policy requirements at their head office and ensure that the policy covers liabilities arising from operations at the IFSC branch office.

Operations and Management: Ownership and Control, Remuneration, Board Policies, and More

In the realm of insurance intermediaries, it is important to understand various regulations that govern the industry. This article aims to shed light on some key aspects that insurance intermediaries need to comply with in their operations and management. Let's dive in!

Ownership and Control of Shares

To ensure transparency and regulatory compliance, any change in beneficial ownership of shares or contribution and control of an Insurance Intermediary (IIIO) must strictly follow the processes and procedures specified by the Authority.

Remuneration and reward from insurers

When it comes to remuneration, rewards, fees, or any other payments received by an IIIO from an insurer, such transactions should adhere to the prescribed mode and manner as set forth by the Authority. This ensures fair practices and avoids any potential conflicts of interest.

Board Approved Policy for comparison and distribution of insurance products

Every insurance intermediary is required to have a board-approved policy governing the solicitation and servicing of insurance policies. This policy should include considerations such as multiple tie-ups, types of products offered, modes of solicitation, grievance redressal mechanisms, reporting requirements, and more. Furthermore, it is mandatory for this policy to be reviewed by the Board or its equivalent at least once every three years, ensuring that it remains relevant and effective.

Code of conduct for Insurance Intermediary

Adherence to a code of conduct holds significant importance for insurance intermediaries. They are bound to follow the specified Code of Conduct outlined in Schedule-III of the regulations. This ensures ethical, responsible, and professional behavior in the industry.

Internal control and systems

Maintaining proper internal control and systems is essential for insurance intermediaries. To ensure effective functioning, every intermediary is responsible for establishing a robust internal audit system and defining adequate internal controls and systems that align with the size, nature, and complexity of their business.

Segregation of premium

In the case of reinsurance contracts, registered reinsurance brokers or composite brokers may be authorized, as per mutual agreement or international market practices, to collect the premium and remit it to the reinsurer. Similarly, they may also collect claims due from the reinsurer to be passed on to the insurer. The Authority specifies the procedures and guidelines for dealing with the funds collected by registered insurance brokers in such scenarios.

Maintenance of books of account, records, etc.

Insurance intermediaries are required to maintain essential financial statements for each financial year. These include a balance sheet, profit and loss account (on an accrual basis), statement of cash/fund flow (direct method), and any additional statements as prescribed by the Authority. Financial year definitions depend on factors such as whether the branch is established in an IFSC (International Financial Services Centre) or if the entity is incorporated in an IFSC. Accounting standards prescribed by the regulatory or supervisory authority of their home country should be followed.

Alongside financial statements, insurance intermediaries need to submit the audited financial statements, along with the auditor's report, to the Authority within thirty days of holding the annual general meeting or before 30th September each year, whichever comes earlier. The auditor's report may include remarks or observations on the conduct of business and the state of accounts. The intermediary is expected to provide suitable explanations for any observations or remarks made by the auditor.
Any shortcomings highlighted in the auditor's report should be rectified by the intermediary within ninety days of the report's issuance. The Authority must be informed of the steps taken to address these deficiencies.
All books of account, statements, documents, etc., must be maintained at the office of the insurance intermediary in an IFSC and made available for inspection by the Authority.
Furthermore, insurance intermediaries must retain all books, documents, statements, contract notes, etc., as required by the regulations, for a minimum of seven years from the end of the relevant year. Exceptions apply for ongoing cases pending decisions from courts, during which the documents should be maintained until a final verdict is reached. In the case of reinsurance brokers, all other documents must be maintained until their natural expiry.
While maintaining the documents mentioned above, insurance intermediaries have the flexibility to store them in non-editable electronic retrieval form, unless otherwise required by applicable laws.
Lastly, it is crucial for financial statements to include a note providing details of all incomes received from insurers and their group companies, as well as payment details received from group companies, associates, and related parties. Additionally, insurance intermediaries must disclose all related party transactions in their audited accounts and balance sheet, ensuring regulatory compliance.
By adhering to these regulations and guidelines, insurance intermediaries can operate efficiently while upholding transparency, accountability, and ethical practices in the industry.

IIIO, insurance intermediary, certificate renewal process, timely submission, application process, training requirements, additional information, Authority's decision on renewal, consequences of non-renewal, general obligations of IIIOs.

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