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IRDA Insurance License

What is the process of granting license to companies to start an insurance business in our country?

It is mandatory for all entities to acquire a Certificate from the Authority before carrying on any insurance business. The license to be acquired for various categories of insurance can be procured from the IRDA, for example Life Insurance, Fire Insurance, Marine Insurance etc. But it is to be kept in mind that the life insurance business shall not be combined with any other type of insurance business.

The license from IRDA is mandatory. Also the old players in the arena of insurance, like the National Insurance, General Insurance, Oriental Insurance etc., had to obtain a fresh certificate within 3 months from the date of commencement of this Act. The insurers exempted from obtaining license under the previous Act, were covered under this Act.

Document Required:-

Step-1:-

A request for acquiring the Certificate of Registration should be made to the IRDA in Form prescribed under IRDA/R1. The application should be supported by the following documents:

  • The certified copy of the Memorandum of Association and Articles of Association;

  • The full profile including the name, address and occupation of all the directors and shareholders of the company;

  • The statement regarding the class of insurance business proposed to be carried on.

  • The statement regarding the sources of capital funds.

The primary appeal would be screened by IRDA and additional information may be asked for. Even a Principal Officer may be appointed by the Authority for seeking any information or clarification on their behalf.

 

Step 2:-

After being contented about the instructions and documents supplied along with the Form IRDA/R1, the Authority may ask for an additional application in the prescribed Form IRDA/R2 which shall be accompanied with the following documents:

Every entity shall deposit either in cash or in securities , partly in cash and party in securities, the following:

  • In the previous year,3% of the total gross premium written in India, in case of the general insurance business, not exceeding INR 10 crore;

  • A sum of INR 20 crores in case of reinsurance business;

  • A sum of INR 1 lac/- only in case of marine business;

  • The certificate showing the amount deposited with the Reserve Bank of India.

The statement showing declaration from the Principal Officer about fulfillment of Minimum Capital Requirement. For a reinsurance business the capital requirement shall be 20 crores and for the life insurance as well as General Insurance 10 crores.

  • Actuary certificate regarding rate of interest.

  • A deposit of INR 50,000/- for each class of business.

  • If any foreign promoter is involved, then the certified copy of the MOU between the Indian and Foreign promoter.

Grant of Registration Certificate for Insurance business in India
Only after the receipt of application and on being contented about the following mentioned conditions, the Certificate of Registration shall be granted to the insurer by the IRDA. The conditions include the following:

  • Sound financial condition and general character of the management;

  • Adequate volume, capital structure and earning prospects of the applicant company;

  • Fulfillment of the interest of the general public.

Refusal of Registration for insurance operations
The applicant may be refused of the registration of an insurer on the following grounds:

Inadequate or improper information;

Delay in providing information;

Non-fulfilment of capital requirements;

Improper conduct of the management;

Any other as decided by the Authority.

In case, the aspirant is denied of the registration as an insurer, he can appeal before the Central Govt. within 30 days from the date on which a copy of the decision from the Authority is received

In case of the insurance registration, the decision of the government shall be final and cannot be appealed against in any court of law.

Cancellation of Registration

In case of any conditions particularized for registration is not compiled with, then the Authority reserves the right to cancel the registration either wholly or in part, in case the applicant is involved in more than one insurance business.

Document Required

The registration shall only be renewed annually and the application for renewal shall be made before 31st December of the preceding year following which the renewal is sought for, along with the fees as below:

  • The fees should not be less than 50,000/- for each class of insurance;

  • 1/4th of the 1% of the premium received during the year in India, for reinsurance companies;

  • The renewal fees shall be paid to the Reserve Bank of India.

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