An insurance broker license is the permit to provide insurance broking services to the people. Acting on behalf of customers, a broker acts as a bridge between them and the companies. But why is this license a necessity in India?
IRDA or Insurance Regulatory Development Authority of India came into existence once the government realized that the insurance market shouldn’t be considered as free real estate. There were many fraudulent individuals and organizations plaguing the insurance sector. To quell that disease, the IRDA came up with many regulations – one of them was the Insurance Broker License.
As per the regulations, any entity that wishes to solicit insurance products must first acquire the certificate of registration from the IRDA. It is after taking a look at the complex regulations that insurance broker aspirants started to look for answers behind the need for this license.
This article puts the reasons behind the license in clear terms so that you don’t question the need for this business registration.
Why has IRDA mandated the Insurance Broking License?
The following are the justifiable list of reasons why the Insurance Regulatory and Development Authority of India decided to introduce the certificate of registration for insurance brokers.
Increasing the number of insurance policies sold in the market
When it comes down to it, it is not only the industry that earns the benefit when a product is sold, the government has an equal stake in it. And insurance policies, arguably being the most important products in the market, can yield a lot of profits for the government. Therefore, to maximize the sale of insurance policies in the market, IRDA introduced the certificate of registration.
Regulating the insurance market
Insurance products literally come with many terms and conditions as all of them are physically present in the last pages of the policy documents. Without the right oversight, such regulations can take several forms, and not all of them would be beneficial for the customers. Therefore, to regulate the insurance policies by ensuring that entities provide their products within the legal constraints, IRDA came up with the Insurance Broking License India.
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Conducting market research in the insurance sector
Insurance Regulatory and Development Authority of India, which licenses the insurance broker, isn’t just here to formulate rules and regulations. It also has to watch over the market closely because the market trend dictates the rules for the Insurance Broker License in India.
Ensuring that the right entities get the license
Not everyone has what it takes to become an insurance broker. The eligibility criteria set up a high skill ceiling that aspirants must meet before applying for the license. Furthermore, the constantly evolving market doesn’t make it easy for everyone to keep up with it. Therefore, the right people must get the license, and the insurance broker license filters them.
Presenting the customers with genuine Insurance Brokers
There are not many brokers in India that we would call genuine. Many are just pretenders who are trying to profit from the naiveté of the masses. These “brokers” do not market their services but instead fly under the radar of the IRDA. Customers who aren’t privy to certificates like the auto insurance broker’s license, get easily fooled by such fraudulent entities. Therefore, IRDA had to take steps to provide customers with a way to separate genuine service providers from the rest.
Creating entities that negotiate policies and premiums on behalf of clients
Insurance broker registration creates entities that can bridge the communication gap between the insurance companies and the customers. By interpreting the terms of the insurance policies, the brokers help customers make an informed choice. Furthermore, they help customers with the payment of insurance premiums.
Is the Insurance Broker License suitable for you?
To start an insurance broking business means starting a business entity that exists between a customer and an insurance company. Therefore, to become a broker you must have:
- In-depth knowledge of the insurance market
- The zeal to provide insurance services
- And, the professionalism to conduct your business ethically
If you can meet all those requirements, apply for Insurance Broker License.
The insurance market is in constant flux and has a tendency to create fraudulent elements out of desperation. Additionally, it is a market that can be beneficial for the government of India. Therefore, the IRDA has made the Insurance Broker license mandatory.
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