Requirements and Procedure for Insurance Broker License

Requirements and Procedure for Insurance Broker License. The insurance sector in India is regulated by the Insurance Regulatory and Development Authority of India (IRDAI). Any individual, company, or entity intending to operate as an insurance broker must obtain an Insurance Broker License from the IRDAI. Insurance brokers serve as intermediaries between insurance companies and clients and are responsible for soliciting, arranging, and servicing insurance business. The licensing process is exclusively online and governed under the IRDAI (Insurance Brokers) Regulations, 2018, as amended. The license is essential to ensure financial stability, technical capability, and ethical conduct in insurance intermediation.
Eligibility Criteria for Obtaining Insurance Broker License
Before applying, the applicant must ensure eligibility based on legal structure, financial standing, and operational readiness.
Permissible Legal Entities
IRDAI permits the following types of entities to register as insurance brokers:

Company: A company incorporated under the Companies Act, 2013 (or 1956). It must have insurance broking as its main objective in the MOA.

Limited Liability Partnership (LLP): Registered under the Limited Liability Partnership Act, 2008. The partnership deed must clearly state the broking activity.

Co-operative Society: Registered under the Co-operative Societies Act, 1912, or relevant state acts. These are usually welfare-based and must meet additional scrutiny.

Other Permissible Entities: Includes individuals or firms permitted by IRDAI or law to carry on broking, subject to fulfilling all requirements.

Capital and Financial Requirements
Financial criteria are central to ensure the broker has sufficient financial stability to protect client interests.
Minimum Capital Requirements

Type of Broker

Capital Requirement

Direct Broker

Rs.75 Lakhs

Reinsurance Broker

Rs.4 Crores

Composite Broker

Rs.5 Crores

The capital must be brought in as equity in case of companies or partner’s contribution in case of LLPs. Preference shares or debt instruments are not accepted.
Net Worth Requirements
Net worth refers to the total assets minus total liabilities of the company, as defined under the Companies Act, 2013.

Direct Broker: Rs.50 Lakhs (to be maintained at all times)

Reinsurance Broker: Minimum Rs.2 Crores (50% of Rs.4 Crores)

Composite Broker: Minimum Rs.2.5 Crores (50% of Rs.5 Crores)

The net worth must be certified by a Chartered Accountant every six months, and non-compliance must be rectified immediately.
Deposit Requirement
As a risk-mitigation measure, brokers must deposit funds in a scheduled commercial bank.

Type of Broker

Deposit Required

Direct Broker

Rs.10 Lakhs

Reinsurance/Composite

10% of minimum capital (i.e., Rs.40–50 Lakhs)

This deposit acts as a security reserve and cannot be withdrawn or released without the prior written consent of IRDAI.
Infrastructure Requirements
The applicant must maintain adequate infrastructure to support operations.

Office Space: Should be sufficient to accommodate operations and proof of ownership or long-term lease must be provided.

IT Systems: Proper infrastructure for record keeping, data security, online interactions, and policy management. Must be capable of interfacing with insurer portals and customer databases.

Human Resources: Sufficient qualified personnel to handle operations and staff must undergo periodic training to stay updated with insurance laws and practices

Qualification and Personnel Requirements

Qualified Individuals: At least two qualified individuals must be present, with certification in their respective fields if only life/general insurance is handled, one person must be certified for that specific line. If both life and general insurance breaking is undertaken, the qualified persons must hold both certifications.

Principal Officer: The Principal Officer is the most senior person responsible for regulatory compliance and ethical conduct. Must be a whole-time director, partner, or key management personnel. Must possess the necessary certification and training, usually completed through IRDAI-accredited training institutions. Must submit Fit & Proper declaration (Form G) and not be disqualified under any law.

Object Clause – MOA & AOA Compliance: The main object clause in the company’s Memorandum of Association (MOA) and Articles of Association (AOA) must include “Insurance Broking” as the primary business. IRDAI will reject applications where the object clause includes unrelated activities or lacks reference to broking.

Foreign Direct Investment (FDI) Policy India allows 100% FDI in insurance broking through the automatic route, subject to the following: Compliant with IRDAI guidelines and sectoral conditions. Shareholding structure must be disclosed clearly. FDI must not violate national security or FEMA guidelines.

Professional Indemnity Insurance
All brokers must maintain Professional Indemnity Insurance to safeguard against breach of duty Misstatement or negligence Errors and omissions Regulatory penalties. This insurance must be valid throughout the registration period. Newly registered brokers are allowed 12 months from issuance of registration to procure the policy.
Application Procedure for Insurance Broker License Online

Visit the official IRDAI BAP portal: irdabap.org.inRegister using basic company information. System will generate a username and password and email it to the registered email ID.

Filing Application: Submit application in the following format : Form B – Application Form (specify broker type), Form C – List of enclosures and documents, Form D – Payment structure and proof All submissions are to be made online only.

Required Documents
A complete checklist includes:

Form B, C, and D

MOA and AOA with correct object clauses

Proof of capital infusion

Net worth certificate from a Chartered Accountant

Details of office infrastructure

Lease deed/ownership proof

Details of Principal Officer (Form F)

Fit & Proper declaration (Form G)

Qualification certificates of staff

Identity and address proofs of directors, partners

List of KMPs and promoters

Bank details and statutory auditor details

Board resolution for application

Application Scrutiny and Approval

Clarifications and Corrections: IRDAI may request additional information or clarification. The applicant must comply within 30 days of intimation.

In-Principle Approval : Upon satisfactory review An in-principle approval is granted. Applicant completes remaining formalities (office setup, indemnity insurance, deposit, etc.)

Grant of Certificate: Final verification is conducted. Upon completion, IRDAI grants a Certificate of Registration, valid for three years.

Rejection of Application
IRDAI may reject an application if:

Eligibility criteria are not met

False/misleading documents are submitted

Critical requirements are left incomplete

If rejected:

Rejection is communicated within 30 days

Applicant can reapply after one year

Renewal of License
Renewal Process application must be submitted 30 days before expiry using Form K – Schedule I. Same requirements apply as for new application Delayed applications attract penalty:

Timeframe

Penalty

Before expiry but delayed

Rs.100

Within 60 days after expiry

Rs.750

After 60 days

Application rejected. Reapply after 1 year

Post-Registration Compliance
Once registered, the broker must:

Maintain Books of Accounts

Submit net worth and audit reports

Maintain and renew Professional Indemnity Insurance

Address complaints within 14 days

Adhere to Code of Conduct

File periodic returns to IRDAI

Notify IRDAI of material changes in management or ownership

Conclusion
Obtaining an insurance broker license in India is a rigorous, compliance-intensive process aimed at protecting clients and ensuring transparency in the insurance sector. While the requirements may appear stringent, they ensure only financially sound, ethically driven, and technically competent intermediaries operate in the market.
If you need any assistance in obtaining Insurance Broker License connect with Compliance Calendar LLP through mail at info@ccoffice.in or Call/Whatsapp at +91 9988424211.
FAQs 
Q1. I have filed my ITR under presumptive taxation (Section 44AD or 44ADA). Why did I still receive a notice under Section 143(2)?
Ans. Filing under presumptive taxation simplifies tax compliance but does not exempt you from scrutiny. You may receive a notice if:

There's a mismatch in reported income and Form 26AS/AIS/TIS

The department wants to verify your mode of receipts (digital vs cash)

You claimed high deductions under Chapter VI-A

Your return was selected under CASS or manual scrutiny criteria

Q2. What is a Section 143(2) notice?
Ans. It is a notice for scrutiny assessment, issued when the Income Tax Department wants to verify the accuracy of the income, deductions, and information reported in your ITR. 
Q3. What should I do after receiving the notice?
Ans. Log in to your e-filing portal and check the "e-Proceedings" section

Read the reason for scrutiny carefully

Prepare and upload the required documents (e.g., invoices, bank statements)

Respond within the deadline mentioned in the notice

Q4. Is the faceless assessment applicable in this case?
Ans. Yes. Under Section 144B, the assessment is conducted entirely online. You will receive communication via email/SMS, and responses must be submitted through the Income Tax Portal. There’s no physical visit or face-to-face interaction with the Assessing Officer. 
Q5. I declared income @ 6% under Section 44AD for digital receipts, but now I’m asked to prove it. Why?
Ans. The 6% presumptive rate applies only if the receipts are through recognised digital modes (UPI, NEFT, IMPS, etc.). The department may issue a notice to verify the actual mode of receipts. If not proven, they may apply the 8% rate instead. 
Q6. Do I need to maintain books of accounts under presumptive taxation?
Ans. No, you're not required to maintain books of account if you declare income at or above the prescribed rates (8%/6% or 50%). However, you must retain proof of gross receipts, such as:

Sales bills/invoices

Bank statements

Payment confirmations

These may be required during scrutiny. 
Q7. What if I ignore the notice?
Ans. Ignoring the notice may result in:

Penalty of Rs.10,000 under Section 272A for non-compliance

Best Judgment Assessment under Section 144

Higher tax liability and potential interest

Prosecution in serious or repeated cases

Always respond within the given timeframe. 
Q8. Can I handle the notice myself or should I hire a professional?
Ans. If the notice is straightforward and you understand the requirements, you can respond yourself through the portal. However, for complex issues or large transactions, it's advisable to consult a Chartered Accountant or tax expert. 
Q9. What documents should I keep ready to respond?
Ans. Bank statements and passbooks

Proof of digital transactions (if claiming 6%)

Invoices/bills raised

A copy of your ITR and computation

Receipts for deductions claimed under Chapter VI-A

Q10. Can I still be selected for scrutiny even if there are no errors in my return?
Ans. Yes. Under CASS (Computer Aided Scrutiny Selection), even clean returns may be randomly selected for limited or complete scrutiny as part of quality checks or data matching exercises.

The insurance sector in India is regulated by the Insurance Regulatory and Development Authority of India (IRDAI). Any individual, company, or entity intending to operate as an insurance broker must obtain an Insurance Broker License from the IRDAI. Insurance brokers serve as intermediaries between insurance companies and clients and are responsible for soliciting, arranging, and servicing insurance business. The licensing process is exclusively online and governed under the IRDAI (Insurance Brokers) Regulations, 2018, as amended. The license is essential to ensure financial stability, technical capability, and ethical conduct in insurance intermediation.

Eligibility Criteria for Obtaining Insurance Broker License

Before applying, the applicant must ensure eligibility based on legal structure, financial standing, and operational readiness.

Permissible Legal Entities

IRDAI permits the following types of entities to register as insurance brokers:

Company: A company incorporated under the Companies Act, 2013 (or 1956). It must have insurance broking as its main objective in the MOA.
Limited Liability Partnership (LLP): Registered under the Limited Liability Partnership Act, 2008. The partnership deed must clearly state the broking activity.
Co-operative Society: Registered under the Co-operative Societies Act, 1912, or relevant state acts. These are usually welfare-based and must meet additional scrutiny.
Other Permissible Entities: Includes individuals or firms permitted by IRDAI or law to carry on broking, subject to fulfilling all requirements.

Capital and Financial Requirements

Financial criteria are central to ensure the broker has sufficient financial stability to protect client interests.

Minimum Capital Requirements

Type of Broker	Capital Requirement
Direct Broker	Rs.75 Lakhs
Reinsurance Broker	Rs.4 Crores
Composite Broker	Rs.5 Crores

The capital must be brought in as equity in case of companies or partner’s contribution in case of LLPs. Preference shares or debt instruments are not accepted.

Net Worth Requirements

Net worth refers to the total assets minus total liabilities of the company, as defined under the Companies Act, 2013.

Direct Broker: Rs.50 Lakhs (to be maintained at all times)
Reinsurance Broker: Minimum Rs.2 Crores (50% of Rs.4 Crores)
Composite Broker: Minimum Rs.2.5 Crores (50% of Rs.5 Crores)

The net worth must be certified by a Chartered Accountant every six months, and non-compliance must be rectified immediately.

Deposit Requirement

As a risk-mitigation measure, brokers must deposit funds in a scheduled commercial bank.

Type of Broker	Deposit Required
Direct Broker	Rs.10 Lakhs
Reinsurance/Composite	10% of minimum capital (i.e., Rs.40–50 Lakhs)

This deposit acts as a security reserve and cannot be withdrawn or released without the prior written consent of IRDAI.

Infrastructure Requirements

The applicant must maintain adequate infrastructure to support operations.

Office Space: Should be sufficient to accommodate operations and proof of ownership or long-term lease must be provided.
IT Systems: Proper infrastructure for record keeping, data security, online interactions, and policy management. Must be capable of interfacing with insurer portals and customer databases.
Human Resources: Sufficient qualified personnel to handle operations and staff must undergo periodic training to stay updated with insurance laws and practices

Qualification and Personnel Requirements

Qualified Individuals: At least two qualified individuals must be present, with certification in their respective fields if only life/general insurance is handled, one person must be certified for that specific line. If both life and general insurance breaking is undertaken, the qualified persons must hold both certifications.
Principal Officer: The Principal Officer is the most senior person responsible for regulatory compliance and ethical conduct. Must be a whole-time director, partner, or key management personnel. Must possess the necessary certification and training, usually completed through IRDAI-accredited training institutions. Must submit Fit & Proper declaration (Form G) and not be disqualified under any law.
Object Clause – MOA & AOA Compliance: The main object clause in the company’s Memorandum of Association (MOA) and Articles of Association (AOA) must include “Insurance Broking” as the primary business. IRDAI will reject applications where the object clause includes unrelated activities or lacks reference to broking.
Foreign Direct Investment (FDI) Policy India allows 100% FDI in insurance broking through the automatic route, subject to the following: Compliant with IRDAI guidelines and sectoral conditions. Shareholding structure must be disclosed clearly. FDI must not violate national security or FEMA guidelines.

Professional Indemnity Insurance

All brokers must maintain Professional Indemnity Insurance to safeguard against breach of duty Misstatement or negligence Errors and omissions Regulatory penalties. This insurance must be valid throughout the registration period. Newly registered brokers are allowed 12 months from issuance of registration to procure the policy.

Application Procedure for Insurance Broker License Online

Visit the official IRDAI BAP portal: irdabap.org.inRegister using basic company information. System will generate a username and password and email it to the registered email ID.
Filing Application: Submit application in the following format : Form B – Application Form (specify broker type), Form C – List of enclosures and documents, Form D – Payment structure and proof All submissions are to be made online only.

Required Documents

A complete checklist includes:

Form B, C, and D

MOA and AOA with correct object clauses

Proof of capital infusion

Net worth certificate from a Chartered Accountant

Details of office infrastructure

Lease deed/ownership proof

Details of Principal Officer (Form F)

Fit & Proper declaration (Form G)

Qualification certificates of staff

Identity and address proofs of directors, partners

List of KMPs and promoters

Bank details and statutory auditor details

Board resolution for application

Application Scrutiny and Approval

Clarifications and Corrections: IRDAI may request additional information or clarification. The applicant must comply within 30 days of intimation.
In-Principle Approval : Upon satisfactory review An in-principle approval is granted. Applicant completes remaining formalities (office setup, indemnity insurance, deposit, etc.)
Grant of Certificate: Final verification is conducted. Upon completion, IRDAI grants a Certificate of Registration, valid for three years.

Rejection of Application

IRDAI may reject an application if:

Eligibility criteria are not met
False/misleading documents are submitted
Critical requirements are left incomplete

If rejected:

Rejection is communicated within 30 days
Applicant can reapply after one year

Renewal of License

Renewal Process application must be submitted 30 days before expiry using Form K – Schedule I. Same requirements apply as for new application Delayed applications attract penalty:

Timeframe	Penalty
Before expiry but delayed	Rs.100
Within 60 days after expiry	Rs.750
After 60 days	Application rejected. Reapply after 1 year

Post-Registration Compliance

Once registered, the broker must:

Maintain Books of Accounts
Submit net worth and audit reports
Maintain and renew Professional Indemnity Insurance
Address complaints within 14 days
Adhere to Code of Conduct
File periodic returns to IRDAI
Notify IRDAI of material changes in management or ownership

Conclusion

Obtaining an insurance broker license in India is a rigorous, compliance-intensive process aimed at protecting clients and ensuring transparency in the insurance sector. While the requirements may appear stringent, they ensure only financially sound, ethically driven, and technically competent intermediaries operate in the market.

If you need any assistance in obtaining Insurance Broker License connect with Compliance Calendar LLP through mail at info@ccoffice.in or Call/Whatsapp at +91 9988424211.

FAQs

Q1. I have filed my ITR under presumptive taxation (Section 44AD or 44ADA). Why did I still receive a notice under Section 143(2)?

Ans. Filing under presumptive taxation simplifies tax compliance but does not exempt you from scrutiny. You may receive a notice if:

There's a mismatch in reported income and Form 26AS/AIS/TIS
The department wants to verify your mode of receipts (digital vs cash)
You claimed high deductions under Chapter VI-A
Your return was selected under CASS or manual scrutiny criteria

Q2. What is a Section 143(2) notice?

Ans. It is a notice for scrutiny assessment, issued when the Income Tax Department wants to verify the accuracy of the income, deductions, and information reported in your ITR.

Q3. What should I do after receiving the notice?

Ans. Log in to your e-filing portal and check the "e-Proceedings" section

Read the reason for scrutiny carefully
Prepare and upload the required documents (e.g., invoices, bank statements)
Respond within the deadline mentioned in the notice

Q4. Is the faceless assessment applicable in this case?

Ans. Yes. Under Section 144B, the assessment is conducted entirely online. You will receive communication via email/SMS, and responses must be submitted through the Income Tax Portal. There’s no physical visit or face-to-face interaction with the Assessing Officer.

Q5. I declared income @ 6% under Section 44AD for digital receipts, but now I’m asked to prove it. Why?

Ans. The 6% presumptive rate applies only if the receipts are through recognised digital modes (UPI, NEFT, IMPS, etc.). The department may issue a notice to verify the actual mode of receipts. If not proven, they may apply the 8% rate instead.

Q6. Do I need to maintain books of accounts under presumptive taxation?

Ans. No, you're not required to maintain books of account if you declare income at or above the prescribed rates (8%/6% or 50%). However, you must retain proof of gross receipts, such as:

Sales bills/invoices
Bank statements
Payment confirmations

These may be required during scrutiny.

Q7. What if I ignore the notice?

Ans. Ignoring the notice may result in:

Penalty of Rs.10,000 under Section 272A for non-compliance
Best Judgment Assessment under Section 144
Higher tax liability and potential interest
Prosecution in serious or repeated cases

Always respond within the given timeframe.

Q8. Can I handle the notice myself or should I hire a professional?

Ans. If the notice is straightforward and you understand the requirements, you can respond yourself through the portal. However, for complex issues or large transactions, it's advisable to consult a Chartered Accountant or tax expert.

Q9. What documents should I keep ready to respond?

Ans. Bank statements and passbooks

Proof of digital transactions (if claiming 6%)
Invoices/bills raised
A copy of your ITR and computation
Receipts for deductions claimed under Chapter VI-A

Q10. Can I still be selected for scrutiny even if there are no errors in my return?

Ans. Yes. Under CASS (Computer Aided Scrutiny Selection), even clean returns may be randomly selected for limited or complete scrutiny as part of quality checks or data matching exercises.