IRDAI Insurance Broker Compliance

IRDAI Insurance Broker Compliance. IRDAI Compliance 
Insurance Broker Company compliance under the IRDAI (Insurance Regulatory and Development Authority of India) structure is one of the most detailed and strictly monitored compliance ecosystems in India’s financial services sector. Every insurance broker company, whether a direct broker, reinsurance broker, or composite broker is required to maintain continuous IRDAI regulatory compliance, operational discipline, and statutory reporting as per the IRDAI (Insurance Brokers) Regulations, 2018 and subsequent circulars, guidelines, and amendments issued from time to time.
The insurance broking industry is governed by a strict regime of corporate governance, capital requirements, all times net-worth maintenance, professional indemnity insurance, audit obligations, anti-money laundering safeguards, policyholder protection rules, and ongoing reporting through the IRDAI BAP (Broker Administration Portal), makes “insurance broker compliance” and “IRDAI broker regulations” among the most important topics for industry participants, policyholders, and financial regulators in India. As IRDAI continues to strengthen the insurance distribution ecosystem, insurance brokers in India are required to adopt strong internal controls, transparent customer communication, and strict adherence to the IRDAI code of conduct.
Professional Indemnity Insurance Compliance
A major component of insurance broker compliance is the requirement to maintain professional indemnity insurance at all times. Every insurance broker is required to take and renew indemnity coverage that protects clients and insurers from Errors, Omissions, Negligence, Fraud AND Breach of duty etc . The indemnity policy must cover wrongful acts of employees, losses arising from professional services, and claims discovered during the policy period and the indemnity insurance limit is linked to the broker’s revenue, usually:

Three times the remuneration of the preceding year, or

Rs.50 lakh, whichever is higher

Code of Conduct Compliance
The cornerstone of IRDAI insurance broker compliance is the Code of Conduct, which mandates Integrity, Fair dealing, Full disclosure, Product suitability, Transparency, Conflict-free advisory and Brokers must:

Act in the best interest of clients

Disclose remuneration

Avoid misleading statements

Maintain confidentiality

Provide adequate product comparison

IRDAI Broker Company must obtain a written client mandate (for corporate clients) and conduct suitability analysis before offering recommendations. The code of conduct also prohibits brokers from accepting gifts, incentives, or dual representation without disclosure. These obligations are closely monitored during IRDAI audits and inspections.
Record Keeping & Audit Requirements
A mandatory and major part of insurance broker company compliance is compliance with record-keeping, document retention, and operational audit requirements and Brokers must maintain records related to:

Proposals

Product comparison

Risk analysis

Client mandate letters

KYC documents

Claims assistance

Grievance records

Remuneration statements

Reinsurance treaties

Correspondence with insurers

All records must be preserved for at least seven years. Brokers must undergo annual audits covering:

Financial statements

Internal controls

Compliance with IRDAI regulations

Adherence to remuneration caps

Solicitation practices

Mandatory registers

Audit reports must be submitted to IRDAI within 30 days of the AGM in case of Private Limited Company.
IRDAI BAP Portal Filings
Insurance broker company must file numerous periodic submissions and annual returns on the IRDAI BAP portal, including:

Annual Return

Net Worth Certificate

Auditor Compliance Certificate

Details of remuneration from insurers

Corporate Governance Certificate

Business Statement

List of Qualified Persons

PO training details

Reinsurance placement details (where applicable)

Grievance Redressal Statement

Indemnity Insurance Compliance Declaration

Grievance Redressal Compliance
Insurance broker companies must follow strong grievance redressal systems, including:

Maintaining a complaint register

Acknowledging grievances within 3 days

Resolving grievances within 2 weeks

Reporting grievance statistics to IRDAI

Financial Discipline & Insurance Bank Account Requirements
Brokers must maintain strict financial segregation.
Reinsurance and composite brokers must maintain a separate Insurance Bank Account dedicated to policy-related transactions.
AML / CFT / KYC Compliance
Insurance brokers must comply with IRDAI and FIU-IND anti-money laundering rules. Key obligations include:

Client identification & KYC

Risk profiling

PEP screening

Transaction monitoring

Filing STR (Suspicious Transaction Reports)

Appointment of AML Compliance Officer

Reporting to FIU-IND

Cyber Security Compliance
Brokers must implement strong cyber-security measures due to sensitive customer data handling.
These include:

IT security controls

Encryption

Access management

Disaster recovery

Cyber insurance (optional)

Data logs and vulnerability testing

License Renewal Compliance
Every insurance broker must follow strict renewal procedures:

Submit renewal application 30 days before licence expiry

Updated Net Worth Certificate

Professional indemnity insurance proof

List of QPs & PO’s training status

Auditor’s compliance certificate

Self-declaration of compliance

Missing even one requirement can lead to rejection of renewal.
Prohibited Activities Under IRDAI Regulations
Brokers are prohibited from:

Multi-level marketing

Unauthorised bundling

Mis-selling

Charging unapproved fees

Sharing commission with unlicensed entities

Acting as insurer

FDI & Shareholding Compliance
Insurance brokers can receive 100% FDI but must Comply with FEMA and Report shareholding changes to IRDAI along with Maintain Fit & Proper standards for shareholders if any.
Remuneration & Commission Compliance
Brokers must comply with IRDAI remuneration regulations:

Adhering to commission caps

Disclosing remuneration

Avoiding prohibited incentives

IRDAI Inspection & Supervision
IRDAI may audit brokers anytime to examine accounting Records and books, Sales practices, Grievance mechanism, AML controls, Training & manpower quality and Remuneration correctness etc.
Internal Controls & SOP Requirements
Brokers must implement the Compliance manuals, SOPs, HR training, Risk management structure , Fit & Proper declarations including Continuous governance monitoring
Therefore, the insurance broker compliance ecosystem is extensive, interconnected, and evolving which covers company law, insurance law, financial compliance, consumer protection, AML norms, cyber security, fit and proper criteria, training obligations, governance, reporting, and renewal. With India’s insurance penetration expanding and IRDAI pushing for customer-centric regulation, insurance brokers must maintain full compliance discipline to operate legally and sustain long-term credibility.

IRDAI Compliance

Insurance Broker Company compliance under the IRDAI (Insurance Regulatory and Development Authority of India) structure is one of the most detailed and strictly monitored compliance ecosystems in India’s financial services sector. Every insurance broker company, whether a direct broker, reinsurance broker, or composite broker is required to maintain continuous IRDAI regulatory compliance, operational discipline, and statutory reporting as per the IRDAI (Insurance Brokers) Regulations, 2018 and subsequent circulars, guidelines, and amendments issued from time to time.

The insurance broking industry is governed by a strict regime of corporate governance, capital requirements, all times net-worth maintenance, professional indemnity insurance, audit obligations, anti-money laundering safeguards, policyholder protection rules, and ongoing reporting through the IRDAI BAP (Broker Administration Portal), makes “insurance broker compliance” and “IRDAI broker regulations” among the most important topics for industry participants, policyholders, and financial regulators in India. As IRDAI continues to strengthen the insurance distribution ecosystem, insurance brokers in India are required to adopt strong internal controls, transparent customer communication, and strict adherence to the IRDAI code of conduct.

Professional Indemnity Insurance Compliance

A major component of insurance broker compliance is the requirement to maintain professional indemnity insurance at all times. Every insurance broker is required to take and renew indemnity coverage that protects clients and insurers from Errors, Omissions, Negligence, Fraud AND Breach of duty etc . The indemnity policy must cover wrongful acts of employees, losses arising from professional services, and claims discovered during the policy period and the indemnity insurance limit is linked to the broker’s revenue, usually:

Three times the remuneration of the preceding year, or
Rs.50 lakh, whichever is higher

Code of Conduct Compliance

The cornerstone of IRDAI insurance broker compliance is the Code of Conduct, which mandates Integrity, Fair dealing, Full disclosure, Product suitability, Transparency, Conflict-free advisory and Brokers must:

Act in the best interest of clients
Disclose remuneration
Avoid misleading statements
Maintain confidentiality
Provide adequate product comparison

Record Keeping & Audit Requirements

A mandatory and major part of insurance broker company compliance is compliance with record-keeping, document retention, and operational audit requirements and Brokers must maintain records related to:

Proposals
Product comparison
Risk analysis
Client mandate letters
KYC documents
Claims assistance
Grievance records
Remuneration statements
Reinsurance treaties
Correspondence with insurers

All records must be preserved for at least seven years. Brokers must undergo annual audits covering:

Financial statements
Internal controls
Compliance with IRDAI regulations
Adherence to remuneration caps
Solicitation practices
Mandatory registers

Audit reports must be submitted to IRDAI within 30 days of the AGM in case of Private Limited Company.

IRDAI BAP Portal Filings

Insurance broker company must file numerous periodic submissions and annual returns on the IRDAI BAP portal, including:

Annual Return
Net Worth Certificate
Auditor Compliance Certificate
Details of remuneration from insurers
Corporate Governance Certificate
Business Statement
List of Qualified Persons
PO training details
Reinsurance placement details (where applicable)
Grievance Redressal Statement
Indemnity Insurance Compliance Declaration

Grievance Redressal Compliance

Insurance broker companies must follow strong grievance redressal systems, including:

Maintaining a complaint register
Acknowledging grievances within 3 days
Resolving grievances within 2 weeks
Reporting grievance statistics to IRDAI

Financial Discipline & Insurance Bank Account Requirements

Brokers must maintain strict financial segregation.

Reinsurance and composite brokers must maintain a separate Insurance Bank Account dedicated to policy-related transactions.

AML / CFT / KYC Compliance

Insurance brokers must comply with IRDAI and FIU-IND anti-money laundering rules. Key obligations include:

Client identification & KYC
Risk profiling
PEP screening
Transaction monitoring
Filing STR (Suspicious Transaction Reports)
Appointment of AML Compliance Officer
Reporting to FIU-IND

Cyber Security Compliance

Brokers must implement strong cyber-security measures due to sensitive customer data handling.

These include:

IT security controls
Encryption
Access management
Disaster recovery
Cyber insurance (optional)
Data logs and vulnerability testing

License Renewal Compliance

Every insurance broker must follow strict renewal procedures:

Submit renewal application 30 days before licence expiry
Updated Net Worth Certificate
Professional indemnity insurance proof
List of QPs & PO’s training status
Auditor’s compliance certificate
Self-declaration of compliance

Missing even one requirement can lead to rejection of renewal.

Prohibited Activities Under IRDAI Regulations

Brokers are prohibited from:

Multi-level marketing
Unauthorised bundling
Mis-selling
Charging unapproved fees
Sharing commission with unlicensed entities
Acting as insurer

FDI & Shareholding Compliance

Insurance brokers can receive 100% FDI but must Comply with FEMA and Report shareholding changes to IRDAI along with Maintain Fit & Proper standards for shareholders if any.

Remuneration & Commission Compliance

Brokers must comply with IRDAI remuneration regulations:

Adhering to commission caps
Disclosing remuneration
Avoiding prohibited incentives

IRDAI Inspection & Supervision

IRDAI may audit brokers anytime to examine accounting Records and books, Sales practices, Grievance mechanism, AML controls, Training & manpower quality and Remuneration correctness etc.

Internal Controls & SOP Requirements

Brokers must implement the Compliance manuals, SOPs, HR training, Risk management structure , Fit & Proper declarations including Continuous governance monitoring

Therefore, the insurance broker compliance ecosystem is extensive, interconnected, and evolving which covers company law, insurance law, financial compliance, consumer protection, AML norms, cyber security, fit and proper criteria, training obligations, governance, reporting, and renewal. With India’s insurance penetration expanding and IRDAI pushing for customer-centric regulation, insurance brokers must maintain full compliance discipline to operate legally and sustain long-term credibility.