Business Plan for IRDAI Intermediary License Application

Business Plan for IRDAI Intermediary License Application. Applicable for Broker / Corporate Agent / IMF / Web Aggregator, depending on the entity’s choice.
The Insurance Business Plan has been prepared in line with the requirements of the Insurance Act, 1938 and the respective IRDAI Regulations applicable to insurance intermediaries, including the IRDAI (Insurance Brokers) Regulations, 2018, the IRDAI (Registration of Corporate Agents) Regulations, 2015, the IRDAI (Registration of Insurance Marketing Firms) Regulations, 2015, and the IRDAI (Web Aggregator) Regulations, 2017, as amended from time to time and the purpose of this plan is to present a clear roadmap of the applicant’s proposed operations as an insurance intermediary. This Plan document sets out the organizational framework, financial preparedness, technology infrastructure, distribution strategy, compliance controls, and customer-centric measures that will ensure adherence to IRDAI norms and contribute to the growth of insurance penetration in India.
Learn more about IRDAI Registered Insurance Brokers in India
Objective of the Application
The applicant seeks an IRDAI license to operate as a [Broker / Corporate Agent / IMF / Web Aggregator] in order to:

Facilitate distribution of life, non-life, and health insurance products in a fair and transparent manner.

Ensure strict compliance with IRDAI’s regulatory requirements, including capital adequacy, deposit maintenance, and “fit & proper” governance standards.

Promote financial inclusion by leveraging technology, partnerships, and trained distribution channels.

Protect policyholder interests through robust grievance redressal, AML/KYC processes, and continuous compliance monitoring.

Regulatory Alignment
The business plan has been designed keeping in mind IRDAI’s guiding principles of:

Financial Stability: Maintenance of minimum paid-up capital and IRDAI deposit requirements.

Good Governance: Appointment of qualified directors, promoters, and a certified Principal Officer, all meeting “fit & proper” criteria.

Policyholder Protection: Strong emphasis on grievance redressal, fair commission practices, and risk-based internal controls.

Technology & Security: Deployment of secure CRM, insurer API integrations, and data protection in line with IRDAI’s cybersecurity directions.

Learn more about How to Register an IMF with the IRDAI
 
Structure of the Document
This business plan is structured into the following sections:

Organizational Structure & Management Team

Technology & Infrastructure Framework

Deposits, Capitalization & Financial Roadmap

Revenue Model & Commission Income Projections

Compliance & Risk Management Policies

Financial Projections and Capital Infusion Plan

Lets understand the Regulatory Checkpoints
Prepared in line with IRDAI (Insurance Brokers) Regulations, 2018 / relevant IRDAI Guidelines
Which means that the business plan, compliance documents, or application is drafted strictly as per the Insurance Regulatory and Development Authority of India (IRDAI) requirements. The IRDAI (Insurance Brokers) Regulations, 2018 lay down the eligibility, capital, deposit, personnel, and governance norms for all categories of insurance brokers in India (Direct, Reinsurance, Composite), which assures IRDAI that the applicant has aligned its structure, processes, and documentation with these regulatory benchmarks.
Learn more about Insurance Company Registration
Minimum Capital Requirement
Under Regulation 19 of the 2018 regulations:

Direct Broker: Minimum paid-up capital of Rs.50 lakhs.

Reinsurance Broker: Minimum paid-up capital of Rs.4 crores.

Composite Broker: Minimum paid-up capital of Rs.75 lakhs.Note: Capital must be in the form of equity shares, free from encumbrance, and net worth must be maintained at all times.

IRDA Deposit Requirement
As per Regulation 21, every broker must deposit 10% of the minimum capital with a scheduled bank in the form of a fixed deposit, marked in favour of IRDAI.

For a Direct Broker (Rs.50 lakhs capital), the deposit = Rs.5 lakhs.

For a Composite Broker (Rs.75 lakhs capital), the deposit = Rs.7.5 lakhs.

In the example you mentioned, Rs.10 lakhs deposit is assumed (perhaps considering buffer or projected compliance for FY25–FY27), which acts as a security reserve for policyholders and compliance.
Fit & Proper Criteria
IRDAI requires that all directors, promoters, and the Principal Officer (PO) must be “fit & proper” persons. This is tested through:

No criminal record or conviction involving moral turpitude.

No history of fraud, misfeasance, or insolvency.

Educational and professional qualifications (PO must have insurance-specific training & pass IRDAI’s Broker Examination).

Sound financial integrity and reputation.

Note: Before granting a broker license, IRDAI carefully vets each person associated with management and control to ensure they meet these eligibility norms.
Business Development Strategy
Life Insurance Policies Business Model

Assumptions for 3 Years

No. of BD Representatives: [Fill Year 1–3]

Operational Months: [Fill Year 1–3]

Sales Projection

Unit Linked policies per verifier per month: [Fill Year 1–3]

Term & Endowment policies per verifier per month: [Fill Year 1–3]

Individual Pension Plans sold per month: [Fill Year 1–3]

Renewal Ratio Targets

Unit Linked Policies: [Year 1–3 %]

Term & Endowment: [Year 1–3 %]

Pension Plans: [Year 1–3 %]

Non-Life Insurance Policies Business Model

Assumptions for 3 Years

No. of BD Representatives: [Fill Year 1–3]

Operational Months: [Fill Year 1–3]

Sales Projection

Group Vehicle Insurance policies per BD per month: [Fill Year 1–3]

Average Group Size: [Fill]

Fire Insurance per BD per month: [Fill Year 1–3]

Health Insurance per BD per month: [Fill Year 1–3]

Renewal Ratios

Group Vehicle Insurance: [Year 1–3 %]

Fire Insurance: [Year 1–3 %]

Health Insurance: [Year 1–3 %]

Revenue Model
Life Policies Commission

IRDAI prescribes maximum commission/remuneration limits (Insurance Act, 1938 & IRDAI (Payment of Commission or Remuneration or Reward to Insurance Agents and Intermediaries) Regulations, 2016, as amended in 2023).

Different products have different caps:

Unit Linked Policies (ULIPs): Commission depends on premium paying term (generally 2–7.5%).

Term Insurance: Higher caps (up to 35% of first year premium, then 7.5% on renewals).

Endowment / Traditional Plans: Ranges between 15–35% in first year, 5–7.5% for renewals.

Individual Pension Plans: Commission around 7.5% (first year), lower on renewals.

Business plan must show revenue within IRDAI’s commission ceilings for each line.
Non-Life Commission

For General Insurance, IRDAI caps commissions typically between 10%–20% of premium, depending on the product.

Motor Insurance: 15% (own damage), 10% (third-party).

Health Insurance: 15% to 20% depending on tenure.

Fire/Engineering/Other Classes: Usually 10–15%.

Non-life commission is often a broker’s steady revenue stream, since policies renew annually.
Group Business

Commission on group insurance policies (life or health) is regulated separately.

IRDAI often prescribes lower commission percentages for group size or bulk policies compared to individual retail policies.

Adjustments are based on policy tenure, number of lives covered, and premium collected.

Renewals (Core Income from Year 2 onwards)

IRDAI encourages intermediaries to build sustainable renewal income, not just new business.

Renewal commissions are capped but recurring, ensuring long-term revenue.

For example: Term life (7.5%), Health (10–15%), Motor (10%).

Renewal income is considered stable and regulatory-compliant, forming the backbone of broker cash flows post first year.
Digital / Partnership Income (Web Aggregators)

If the license is as a Web Aggregator, revenue model differs.

Sources include:

Lead referral fees (per valid lead shared with insurer).

Monetization of web traffic (advisory, comparison tools).

IRDAI restricts web aggregators from directly charging customers or insurers beyond approved caps (e.g., Rs.10 per lead max under the IRDAI (Web Aggregator) Regulations, 2017).

Financial Projections (3 Years)
(Tables should be built in Excel – here’s the structure based on your checklist)
Revenue

Product Type

Year 1

Year 2

Year 3

Remarks

Unit Linked Policies

Term & Endowment Policies

Pension Plans

Group Vehicle Insurance

Fire Insurance

Health Insurance

Total Revenue

Business Expenses

Expense Head

Year 1

Year 2

Year 3

Remarks

Advertisement (% of Sales)

Rent (Annual, Rs. Lacs)

Rent (Monthly, Rs. Lacs)

Rent Growth %

Electricity (Annual)

Electricity (Monthly)

Electricity Growth %

BD Expenses per Employee (Monthly)

BD Expenses (Annual, Rs. Lacs)

Legal & Professional Charges (Monthly)

Legal & Professional Charges (Annual)

Office Expenses (Monthly)

Office Expenses (Annual)

Staff Welfare (% of Sales)

Total Expenses

Salaries & HR

Category

No. of Employees

Average Salary

Yearly Salary

Growth %

Remarks

BD Representatives

Management

Technology Team

Total Salary

Deposits & Liabilities

Particulars

FY25

FY26

FY27

Remarks

IRDA Deposit

Fixed

Rental Deposit

Current Liabilities (% of Sales)

Debtors (% of Sales)

17%

Organizational Structure
Board of Directors / Partners

Why required: IRDAI (Insurance Brokers) Regulations, 2018 mandate that the applicant company must have a governing body (Board of Directors in case of company, or partners in case of LLP/partnership) to ensure accountability.

IRDAI’s focus: Background checks to confirm fit & proper status, financial integrity, and absence of regulatory defaults.

Directors are responsible for ensuring compliance with IRDAI directions and policyholder protection.

Principal Officer (PO) – Mandatory IRDAI Certified

The Principal Officer is the single most important position for IRDAI licensing.

Eligibility: Graduate + prescribed qualifications (CA/CS/CFA/MBA/Insurance qualification, etc.).

Mandatory training: 50 hours of pre-licensing training at IRDAI-accredited institutes (100 hours if Composite Broker).

Examination: Must pass the IRDAI Broker Examination conducted by NIA (National Insurance Academy, Pune).

The PO is the compliance face of the broker before IRDAI, responsible for operations, client servicing, and regulatory adherence.

Management Team
IRDAI expects a competent second line of management:

Operations Head: Handles day-to-day insurance broking operations and client servicing.

Compliance Officer: Ensures adherence to IRDAI regulations, AML guidelines, and regulatory filings (returns, renewals, etc.).

Finance Head: Manages statutory accounts, deposit maintenance, capital adequacy, and reporting to IRDAI.

Technology Team (For brokers with digital focus)

IRDAI stresses the importance of robust IT systems (especially for Web Aggregators and brokers handling online leads).

Team should include:

IT Developers: For platform maintenance, API integration with insurers.

Support Staff: For handling client-side queries, complaints, and uptime monitoring.

Cybersecurity and data protection are critical compliance points for IRDAI.

Business Development (BD) Representatives

Brokers are expected to have a clear roadmap for recruiting and training BD staff (including PoSPs – Point of Sales Persons).

IRDAI requires that only trained and certified persons solicit insurance.

BD roadmap must show how the broker will expand distribution ethically without violating commission caps.

Training Plan

PO Training: Minimum 50 hours (Direct/Reinsurance) or 100 hours (Composite), completed before license grant.

Continuous Training for PoSPs/Staff: IRDAI mandates ongoing training programs for PoSPs, BD staff, and compliance team to ensure awareness of changing regulations.

Training records must be maintained and auditable for IRDAI inspections.

Technology & Infrastructure
Insurance Distribution System / CRM

Brokers are expected to maintain a centralized insurance distribution system for handling policy sales, servicing, and renewals.

A CRM (Customer Relationship Management) platform is essential to:

Track leads and customer interactions.

Record policy sales and claims assistance.

Generate MIS reports required for IRDAI periodic filings.

IRDAI emphasizes that customer records must be digitally maintained and retrievable during audits/inspections.

Secure Database for Customer Data (IRDAI Cybersecurity Norms)

Regulatory Requirement: IRDAI’s Information and Cyber Security Guidelines (2017, updated 2023) make brokers responsible for data security, confidentiality, and resilience.

Core expectations:

Storage of sensitive customer information (KYC, policy details, medical data) in encrypted form.

Access controls to restrict unauthorized entry.

Audit trails for all changes.

Regular data backup and disaster recovery plans.

IRDAI can conduct surprise audits to test whether systems comply with its cybersecurity master directions.

API Integration with Insurers for Policy Issuance

IRDAI encourages brokers to adopt seamless integration with insurers’ systems for:

Real-time premium calculation.

Instant policy issuance.

Renewal reminders and endorsements.

Such integrations improve transparency and turnaround time, and reduce mis-selling or policy delays.

For Web Aggregators, IRDAI specifically requires API-based information flow to prevent manipulation of quotes and commissions.

Compliance & Risk Management
Internal Controls (Maker–Checker, Audit Trail)

IRDAI insists that brokers establish robust internal control mechanisms to prevent errors, fraud, or conflict of interest.

Maker–Checker process: No single employee should be able to complete an entire transaction alone; every transaction (policy issuance, premium collection, commission payout) must be checked/approved by a second person.

Audit Trail: All activities (user logins, policy transactions, endorsements, cancellations, payouts) must be digitally recorded and retrievable for IRDAI inspections.

AML & KYC Procedures (as per PMLA, 2002)

Brokers must comply with Prevention of Money Laundering Act, 2002 (PMLA) and related IRDAI AML guidelines.

Mandatory requirements include:

Collecting and verifying KYC documents (PAN, Aadhaar, proof of address, etc.).

Identifying beneficial owners in corporate/group insurance policies.

Conducting risk-based customer due diligence.

Reporting suspicious transactions (STRs) to FIU-IND.

IRDAI treats AML/KYC compliance very seriously and non-compliance can lead to penalties or license suspension.

Grievance Redressal Mechanism

Brokers must appoint a Grievance Redressal Officer (GRO) to handle client complaints.

Escalation matrix:

Level 1: Customer Service / Operations team.

Level 2: GRO.

Level 3: Principal Officer / Board oversight.

All complaints must be resolved within prescribed timelines and records maintained for IRDAI audits.

Brokers must also integrate with IRDAI’s BIMA BHAROSA / IGMS (Integrated Grievance Management System).

Professional Indemnity Insurance

As per Regulation 23 of the IRDAI (Insurance Brokers) Regulations, 2018, every broker must maintain professional indemnity insurance.

Coverage:

At least 2 times the remuneration received in the previous financial year.

Minimum sum insured of Rs.50 lakhs for direct brokers.

Policy must cover errors, omissions, negligence, fraud by employees, loss of documents, etc.

Proof of coverage must be furnished to IRDAI annually and kept valid at all times.

Regulatory Reporting (Half-yearly & Annual)

IRDAI requires brokers to submit periodic returns and reports:

Half-yearly returns: Business figures, commission income, solvency status.

Annual returns: Audited financial statements, compliance certificate, governance disclosures.

Other reports: Change in management, Principal Officer, shareholding, or major litigation must be immediately reported.

Non-filing or delays can attract monetary penalties or suspension of license.

Applicable for Broker / Corporate Agent / IMF / Web Aggregator, depending on the entity’s choice.

The Insurance Business Plan has been prepared in line with the requirements of the Insurance Act, 1938 and the respective IRDAI Regulations applicable to insurance intermediaries, including the IRDAI (Insurance Brokers) Regulations, 2018, the IRDAI (Registration of Corporate Agents) Regulations, 2015, the IRDAI (Registration of Insurance Marketing Firms) Regulations, 2015, and the IRDAI (Web Aggregator) Regulations, 2017, as amended from time to time and the purpose of this plan is to present a clear roadmap of the applicant’s proposed operations as an insurance intermediary. This Plan document sets out the organizational framework, financial preparedness, technology infrastructure, distribution strategy, compliance controls, and customer-centric measures that will ensure adherence to IRDAI norms and contribute to the growth of insurance penetration in India.

Learn more about IRDAI Registered Insurance Brokers in India

Objective of the Application

The applicant seeks an IRDAI license to operate as a [Broker / Corporate Agent / IMF / Web Aggregator] in order to:

Facilitate distribution of life, non-life, and health insurance products in a fair and transparent manner.
Ensure strict compliance with IRDAI’s regulatory requirements, including capital adequacy, deposit maintenance, and “fit & proper” governance standards.
Promote financial inclusion by leveraging technology, partnerships, and trained distribution channels.
Protect policyholder interests through robust grievance redressal, AML/KYC processes, and continuous compliance monitoring.

Regulatory Alignment

The business plan has been designed keeping in mind IRDAI’s guiding principles of:

Financial Stability: Maintenance of minimum paid-up capital and IRDAI deposit requirements.
Good Governance: Appointment of qualified directors, promoters, and a certified Principal Officer, all meeting “fit & proper” criteria.
Policyholder Protection: Strong emphasis on grievance redressal, fair commission practices, and risk-based internal controls.
Technology & Security: Deployment of secure CRM, insurer API integrations, and data protection in line with IRDAI’s cybersecurity directions.

Learn more about How to Register an IMF with the IRDAI

Structure of the Document

This business plan is structured into the following sections:

Organizational Structure & Management Team
Technology & Infrastructure Framework
Deposits, Capitalization & Financial Roadmap
Revenue Model & Commission Income Projections
Compliance & Risk Management Policies
Financial Projections and Capital Infusion Plan

Lets understand the Regulatory Checkpoints

Prepared in line with IRDAI (Insurance Brokers) Regulations, 2018 / relevant IRDAI Guidelines

Which means that the business plan, compliance documents, or application is drafted strictly as per the Insurance Regulatory and Development Authority of India (IRDAI) requirements. The IRDAI (Insurance Brokers) Regulations, 2018 lay down the eligibility, capital, deposit, personnel, and governance norms for all categories of insurance brokers in India (Direct, Reinsurance, Composite), which assures IRDAI that the applicant has aligned its structure, processes, and documentation with these regulatory benchmarks.

Learn more about Insurance Company Registration

Minimum Capital Requirement

Under Regulation 19 of the 2018 regulations:

Direct Broker: Minimum paid-up capital of Rs.50 lakhs.
Reinsurance Broker: Minimum paid-up capital of Rs.4 crores.
Composite Broker: Minimum paid-up capital of Rs.75 lakhs.
Note: Capital must be in the form of equity shares, free from encumbrance, and net worth must be maintained at all times.

IRDA Deposit Requirement

As per Regulation 21, every broker must deposit 10% of the minimum capital with a scheduled bank in the form of a fixed deposit, marked in favour of IRDAI.

For a Direct Broker (Rs.50 lakhs capital), the deposit = Rs.5 lakhs.
For a Composite Broker (Rs.75 lakhs capital), the deposit = Rs.7.5 lakhs.

In the example you mentioned, Rs.10 lakhs deposit is assumed (perhaps considering buffer or projected compliance for FY25–FY27), which acts as a security reserve for policyholders and compliance.

Fit & Proper Criteria

IRDAI requires that all directors, promoters, and the Principal Officer (PO) must be “fit & proper” persons. This is tested through:

No criminal record or conviction involving moral turpitude.
No history of fraud, misfeasance, or insolvency.
Educational and professional qualifications (PO must have insurance-specific training & pass IRDAI’s Broker Examination).
Sound financial integrity and reputation.

Note: Before granting a broker license, IRDAI carefully vets each person associated with management and control to ensure they meet these eligibility norms.

Business Development Strategy

Life Insurance Policies Business Model

Assumptions for 3 Years

No. of BD Representatives: [Fill Year 1–3]
Operational Months: [Fill Year 1–3]

Sales Projection

Unit Linked policies per verifier per month: [Fill Year 1–3]
Term & Endowment policies per verifier per month: [Fill Year 1–3]
Individual Pension Plans sold per month: [Fill Year 1–3]

Renewal Ratio Targets

Unit Linked Policies: [Year 1–3 %]
Term & Endowment: [Year 1–3 %]
Pension Plans: [Year 1–3 %]

Non-Life Insurance Policies Business Model

Assumptions for 3 Years

No. of BD Representatives: [Fill Year 1–3]
Operational Months: [Fill Year 1–3]

Sales Projection

Group Vehicle Insurance policies per BD per month: [Fill Year 1–3]
Average Group Size: [Fill]
Fire Insurance per BD per month: [Fill Year 1–3]
Health Insurance per BD per month: [Fill Year 1–3]

Renewal Ratios

Group Vehicle Insurance: [Year 1–3 %]
Fire Insurance: [Year 1–3 %]
Health Insurance: [Year 1–3 %]

Revenue Model

Life Policies Commission

IRDAI prescribes maximum commission/remuneration limits (Insurance Act, 1938 & IRDAI (Payment of Commission or Remuneration or Reward to Insurance Agents and Intermediaries) Regulations, 2016, as amended in 2023).
Different products have different caps:

Unit Linked Policies (ULIPs): Commission depends on premium paying term (generally 2–7.5%).
Term Insurance: Higher caps (up to 35% of first year premium, then 7.5% on renewals).
Endowment / Traditional Plans: Ranges between 15–35% in first year, 5–7.5% for renewals.
Individual Pension Plans: Commission around 7.5% (first year), lower on renewals.

Business plan must show revenue within IRDAI’s commission ceilings for each line.

Non-Life Commission

For General Insurance, IRDAI caps commissions typically between 10%–20% of premium, depending on the product.

Motor Insurance: 15% (own damage), 10% (third-party).
Health Insurance: 15% to 20% depending on tenure.
Fire/Engineering/Other Classes: Usually 10–15%.

Non-life commission is often a broker’s steady revenue stream, since policies renew annually.

Group Business

Commission on group insurance policies (life or health) is regulated separately.
IRDAI often prescribes lower commission percentages for group size or bulk policies compared to individual retail policies.
Adjustments are based on policy tenure, number of lives covered, and premium collected.

Renewals (Core Income from Year 2 onwards)

IRDAI encourages intermediaries to build sustainable renewal income, not just new business.
Renewal commissions are capped but recurring, ensuring long-term revenue.
For example: Term life (7.5%), Health (10–15%), Motor (10%).

Renewal income is considered stable and regulatory-compliant, forming the backbone of broker cash flows post first year.

Digital / Partnership Income (Web Aggregators)

If the license is as a Web Aggregator, revenue model differs.
Sources include:

Lead referral fees (per valid lead shared with insurer).
Monetization of web traffic (advisory, comparison tools).

IRDAI restricts web aggregators from directly charging customers or insurers beyond approved caps (e.g., Rs.10 per lead max under the IRDAI (Web Aggregator) Regulations, 2017).

Financial Projections (3 Years)

(Tables should be built in Excel – here’s the structure based on your checklist)

Revenue

Product Type	Year 1	Year 2	Year 3	Remarks
Unit Linked Policies
Term & Endowment Policies
Pension Plans
Group Vehicle Insurance
Fire Insurance
Health Insurance
Total Revenue

Business Expenses

Expense Head	Year 1	Year 2	Year 3	Remarks
Advertisement (% of Sales)
Rent (Annual, Rs. Lacs)
Rent (Monthly, Rs. Lacs)
Rent Growth %
Electricity (Annual)
Electricity (Monthly)
Electricity Growth %
BD Expenses per Employee (Monthly)
BD Expenses (Annual, Rs. Lacs)
Legal & Professional Charges (Monthly)
Legal & Professional Charges (Annual)
Office Expenses (Monthly)
Office Expenses (Annual)
Staff Welfare (% of Sales)
Total Expenses

Salaries & HR

Category	No. of Employees	Average Salary	Yearly Salary	Growth %	Remarks
BD Representatives
Management
Technology Team
Total Salary

Deposits & Liabilities

Particulars	FY25	FY26	FY27	Remarks
IRDA Deposit	10	10	10	Fixed
Rental Deposit
Current Liabilities (% of Sales)	8%	8%	8%
Debtors (% of Sales)	17%	17%	17%

Organizational Structure

Board of Directors / Partners

Why required: IRDAI (Insurance Brokers) Regulations, 2018 mandate that the applicant company must have a governing body (Board of Directors in case of company, or partners in case of LLP/partnership) to ensure accountability.
IRDAI’s focus: Background checks to confirm fit & proper status, financial integrity, and absence of regulatory defaults.
Directors are responsible for ensuring compliance with IRDAI directions and policyholder protection.

Principal Officer (PO) – Mandatory IRDAI Certified

The Principal Officer is the single most important position for IRDAI licensing.
Eligibility: Graduate + prescribed qualifications (CA/CS/CFA/MBA/Insurance qualification, etc.).
Mandatory training: 50 hours of pre-licensing training at IRDAI-accredited institutes (100 hours if Composite Broker).
Examination: Must pass the IRDAI Broker Examination conducted by NIA (National Insurance Academy, Pune).
The PO is the compliance face of the broker before IRDAI, responsible for operations, client servicing, and regulatory adherence.

Management Team

IRDAI expects a competent second line of management:

Operations Head: Handles day-to-day insurance broking operations and client servicing.
Compliance Officer: Ensures adherence to IRDAI regulations, AML guidelines, and regulatory filings (returns, renewals, etc.).
Finance Head: Manages statutory accounts, deposit maintenance, capital adequacy, and reporting to IRDAI.

Technology Team (For brokers with digital focus)

IRDAI stresses the importance of robust IT systems (especially for Web Aggregators and brokers handling online leads).
Team should include:

IT Developers: For platform maintenance, API integration with insurers.
Support Staff: For handling client-side queries, complaints, and uptime monitoring.

Cybersecurity and data protection are critical compliance points for IRDAI.

Business Development (BD) Representatives

Brokers are expected to have a clear roadmap for recruiting and training BD staff (including PoSPs – Point of Sales Persons).
IRDAI requires that only trained and certified persons solicit insurance.
BD roadmap must show how the broker will expand distribution ethically without violating commission caps.

Training Plan

PO Training: Minimum 50 hours (Direct/Reinsurance) or 100 hours (Composite), completed before license grant.
Continuous Training for PoSPs/Staff: IRDAI mandates ongoing training programs for PoSPs, BD staff, and compliance team to ensure awareness of changing regulations.
Training records must be maintained and auditable for IRDAI inspections.

Technology & Infrastructure

Insurance Distribution System / CRM

Brokers are expected to maintain a centralized insurance distribution system for handling policy sales, servicing, and renewals.
A CRM (Customer Relationship Management) platform is essential to:

Track leads and customer interactions.
Record policy sales and claims assistance.
Generate MIS reports required for IRDAI periodic filings.

IRDAI emphasizes that customer records must be digitally maintained and retrievable during audits/inspections.

Secure Database for Customer Data (IRDAI Cybersecurity Norms)

Regulatory Requirement: IRDAI’s Information and Cyber Security Guidelines (2017, updated 2023) make brokers responsible for data security, confidentiality, and resilience.
Core expectations:

Storage of sensitive customer information (KYC, policy details, medical data) in encrypted form.
Access controls to restrict unauthorized entry.
Audit trails for all changes.
Regular data backup and disaster recovery plans.

IRDAI can conduct surprise audits to test whether systems comply with its cybersecurity master directions.

API Integration with Insurers for Policy Issuance

IRDAI encourages brokers to adopt seamless integration with insurers’ systems for:

Real-time premium calculation.
Instant policy issuance.
Renewal reminders and endorsements.

Such integrations improve transparency and turnaround time, and reduce mis-selling or policy delays.
For Web Aggregators, IRDAI specifically requires API-based information flow to prevent manipulation of quotes and commissions.

Compliance & Risk Management

Internal Controls (Maker–Checker, Audit Trail)

IRDAI insists that brokers establish robust internal control mechanisms to prevent errors, fraud, or conflict of interest.
Maker–Checker process: No single employee should be able to complete an entire transaction alone; every transaction (policy issuance, premium collection, commission payout) must be checked/approved by a second person.
Audit Trail: All activities (user logins, policy transactions, endorsements, cancellations, payouts) must be digitally recorded and retrievable for IRDAI inspections.

AML & KYC Procedures (as per PMLA, 2002)

Brokers must comply with Prevention of Money Laundering Act, 2002 (PMLA) and related IRDAI AML guidelines.
Mandatory requirements include:

Collecting and verifying KYC documents (PAN, Aadhaar, proof of address, etc.).
Identifying beneficial owners in corporate/group insurance policies.
Conducting risk-based customer due diligence.
Reporting suspicious transactions (STRs) to FIU-IND.

IRDAI treats AML/KYC compliance very seriously and non-compliance can lead to penalties or license suspension.

Grievance Redressal Mechanism

Brokers must appoint a Grievance Redressal Officer (GRO) to handle client complaints.
Escalation matrix:

Level 1: Customer Service / Operations team.
Level 2: GRO.
Level 3: Principal Officer / Board oversight.

All complaints must be resolved within prescribed timelines and records maintained for IRDAI audits.
Brokers must also integrate with IRDAI’s BIMA BHAROSA / IGMS (Integrated Grievance Management System).

Professional Indemnity Insurance

As per Regulation 23 of the IRDAI (Insurance Brokers) Regulations, 2018, every broker must maintain professional indemnity insurance.
Coverage:

At least 2 times the remuneration received in the previous financial year.
Minimum sum insured of Rs.50 lakhs for direct brokers.
Policy must cover errors, omissions, negligence, fraud by employees, loss of documents, etc.

Proof of coverage must be furnished to IRDAI annually and kept valid at all times.

Regulatory Reporting (Half-yearly & Annual)

IRDAI requires brokers to submit periodic returns and reports:

Half-yearly returns: Business figures, commission income, solvency status.
Annual returns: Audited financial statements, compliance certificate, governance disclosures.
Other reports: Change in management, Principal Officer, shareholding, or major litigation must be immediately reported.