Overview of Corporate Agency Licence

A corporate agent, typically an organisation or a company, serves as a representative for an insurance company, prioritising the insurance company's interests. The role of these agents after obtaining a corporate agency licence involves not only advocating for the insurance company but also marketing its policies. Specific guidelines govern the actions of a corporate agent, emphasising their alignment with the insurance company's objectives.

Both companies and banks possess the opportunity to secure a Corporate Agent Licence, thereby enabling them to represent the interests of the insurance organisation. This collaborative association, often known as bancassurance or a partnership, allows financial institutions to tailor insurance packages according to the unique needs and preferences of their customers.

In this capacity, a corporate agent has the potential to represent not only a life insurer but also a non-life insurer and a health insurer, broadening the scope of offerings and expertise available to potential clients.

Categories and Scope of Corporate Agent in the Insurance Industry

Corporate agents are important entities in the insurance sector, facilitating the solicitation, procurement and service for various categories of insurance businesses. Once licenced, corporate agents possess the ability to engage in life insurance, non-life insurance and health insurance segments.

The categories of corporate agency license include:

1. Corporate Agent for Life Insurance Business

Corporate agents specialising in life insurance have the privilege to establish affiliations with up to three life insurance companies. Their primary responsibilities include promoting, soliciting and procuring diverse life insurance products.

2. Corporate Agent for General Insurance Business

Corporate agents dedicated to general insurance operations are authorised to collaborate with a maximum of three general insurance companies. Their core functions revolve around soliciting, advertising and procuring different types of insurance products, both for retail and commercial clients. Notably, this engagement pertains to insurers whose cumulative risk exposure does not surpass Rs. 5 Crore, considering individual insurance amounts.

3. Corporate Agent for Health Insurance Business

Corporate agents specialising in health insurance are permitted to establish associations with three health insurance companies. Their responsibilities primarily include marketing, procurement and servicing of health insurance products.

4. Corporate Agent for Composite Insurance

Composite insurance corporate agents offer a comprehensive range of insurance products that cover both life and non-life risks. These agents are equipped to provide clients with a holistic insurance portfolio, combining life, health and general insurance policies to meet their unique financial protection needs.

Importance of Corporate Agency Licence in India

Obtaining a corporate agent licence is essential within the insurance industry for several compelling reasons:

1. Agency Representation:

The corporate agent licence ensures that the entity is duly authorised to act on behalf of the insurance business or businesses it represents. This formal authorisation establishes a legal framework through which the corporate agent can engage in various activities related to insurance, such as marketing, sales and servicing of insurance products.

2. Product Solicitation:

The licence empowers corporate agents to solicit insurance products on behalf of insurance companies and helps to offer the products to a broader customer base.

3. Regulatory Oversight:

The corporate agent licence is a regulatory mechanism that ensures sufficient oversight and control within the insurance sector. It helps prevent malpractices and fraudulent activities, thereby safeguarding the interests of both insurers and policyholders.

Regulation of Corporate Agency Licences in India

The regulation of corporate agent licences in India falls under the purview of the following regulatory authorities and legal frameworks:

1. Insurance Regulatory and Development Authority of India:

The IRDAI is the key regulatory authority entrusted with the oversight and management of corporate agent licences. This authority plays an important role in governing and supervising the insurance industry in India, ensuring adherence to diverse insurance laws and regulations.

2. Insurance Act, 1938:

Serving as a foundational legal framework, the Insurance Act of 1938 governs the insurance sector in India. It establishes the essential principles and regulations guiding the operations of insurance companies, including the licencing and conduct standards for corporate agents and corporate agent licence in India.

3. Insurance Regulatory and Development Act, 1999:

The Insurance Regulatory and Development Act of 1999 represent a comprehensive legislation conferring regulatory powers to the IRDAI, enabling the regulation and advancement of the insurance sector in India. This act provides the legal framework for the operations of insurance companies, intermediaries and corporate agents.

4. Insurance Regulatory and Development Authority of India [Registration of Corporate Agents] Regulations, 2015:

These regulations are specifically designed to govern the registration and conduct of corporate agents within India. They delineate the criteria for eligibility, roles, responsibilities and prerequisites for corporate agents seeking licences, thereby governing their involvement in the insurance realm.

Eligibility Criteria for Obtaining a Corporate Agency Licence

To secure a Corporate Agent Licence in India, applicants must meet specific eligibility criteria as given below:

1. Minimum Capital Requirements:

An applicant engaged in the insurance distribution business must have an equity capital or contribution and a net worth of at least Rs. 50 Lakhs. The net worth requirement must be maintained by the company at all times.

In the case of an applicant involved in insurance distribution, the aggregate holding of equity shares or contributions made by foreign investors will be determined and prescribed by the central government.

2. Applicant criteria:

The applicant seeking registration as a Corporate Agent must fall into one of the following categories:

• A company formed under the Companies Act, 2013 or the relevant company law.
• A Limited Liability Partnership under the LLP Act, 2008.
• A Co-operative Society registered under the Co-operative Societies Act.
• A banking company.
• A corresponding new bank under the Banking Companies Act, 1949.
• A regional rural bank established under the Regional Rural Banks Act, 1976.
• A Non-Governmental Organisation or a micro-lending finance organisation covered under the Co-operative Societies Act, 1912 or a Non-Banking Financial Company registered with the RBI.
• Any other entity recognised by IRDAI to act as a corporate agent.

3. Other Criteria:

The other essential criteria required for applying for the corporate agency license in India are:

• The applicant must not be disqualified under any prevailing law.

• Adequate office space, equipment and a trained workforce are required for effective discharge of corporate agent activities.

• The Principal Office (the primary responsible individual) must hold a graduate degree and undergo a minimum of 50 hours of practical training as per the prescribed syllabus and guidelines established by the authority.

• Neither the principal officer nor the employees should have violated the code of conduct prescribed by the authority for securing the corporate agent licence during the last three years.

• In cases where the applicant conducts a business unrelated to insurance, an arm's length relationship must be maintained between the financial matters of the other business and the corporate agency business.

• Key management personnel must satisfy the FIT (Fitness) and PROPER (Propriety) criteria.

These eligibility criteria are designed to ensure that entities seeking to operate as corporate agents in the insurance sector possess the necessary financial stability, legal qualifications and ethical standards to uphold the integrity and trustworthiness of the insurance industry in India.

Documents Required for Corporate Agency Licence in India

Given below is a list of documents required for the application for corporate agent licence in India:

1. Relevant Information in Form A:

Submission of all required information as specified in ‘Form A.’

2. Fee Payment:

Remittance of the required fee through electronic mode, as prescribed under Regulation 17 of the IRDAI (Registration of Corporate Agent) Regulations, 2015.

3. Charter Documents of the Applicant:

Submission of charter documents of the applicant entity, including Memorandum and Articles of Association or Byelaws, depending on the type of entity.

4. Fit & Proper Declaration:

A declaration of the Fit & Proper criteria from the Principal Officer, Directors and Managing Partners, provided separately for each individual. This declaration is typically provided using the 'Fit and Proper Form' as specified in the annexure.

5. Infrastructure Details:

Details of the infrastructure, supported by evidence such as ownership or lease agreement papers for office space, equipment and a trained workforce. This information should cover the registered office and any branch offices at various locations.

6. Financial Projections:

Projections of administrative expenses, salaries and wages, other expenses, revenue accounts, profit and loss accounts and balance sheets for the projected three years. This financial information helps assess the financial viability of the applicant.

7. Organisation Chart:

An organisation chart that provides a comprehensive overview of the company's activities, including divisions like IT, underwriting, risk assessment, claims settlement, marketing, accounts and back office functions.

8. Board-Approved Policy on Open Architecture:

Submission of the board-approved policy on open architecture, outlining the approach and strategy regarding the promotion of insurance products from various insurers.

9. Additional Relevant Records or Information:

Any other records or information deemed relevant to the nature of services to be rendered by the applicant for the growth and promotion of the insurance business. This may include marketing strategies, customer service plans or other pertinent details.

10. Additional Requirements by the Authority:

Compliance with any other specific requirements or documents as deemed necessary by the Insurance Regulatory and Development Authority of India.

Procedure for Obtaining a Corporate Agency Licence

The procedure to apply for a Corporate Agent Licence in India is as given below:

1. Submission of Application:

• The applicant must submit an application for a Corporate Agent Licence.
• The application can be made by entities whose primary business does not involve insurance distribution, with insurance distribution serving as a subsidiary activity or by businesses intending to engage exclusively in insurance intermediation.
• The application must be submitted in the prescribed ‘Form A’ as per Schedule –I.
• A fee of Rs. 10,000/- plus applicable taxes must be paid through an Account Payee draft in favour of 'The Insurance Regulatory and Development Authority of India,' payable at Hyderabad. Electronic transfer of fees is also an accepted payment method.
• If the applicant is an institution in the financial sector, a No Objection Certificate must be obtained for conducting transactions in the corporate agency business. However, entities already licenced under the 2002 regulations do not require an NOC.

2. Selection of Category:

• The application must be made under one of the following categories:
  • Corporate Agent (Life Insurance)
  • Corporate Agent (General Insurance)
  • Corporate Agent (Health Insurance)
  • Corporate Agent (Composite Insurance)

3. Eligibility and Conflict Check:

• The applicant, along with its group entities, will be considered for registration. However, the applicant or any other entity should not be engaged in other insurance-related businesses like Corporate Agent, insurance marketing firm, insurance brokering or corporate agency firm. If such a conflict of interest exists, the application will be assessed on its merits.

4. Additional Information:

• The application may be rejected if it does not meet the specified requirements.
• The Insurance Regulatory and Development Authority of India may request further information and documents from the applicant.

5. Registration Fee:

• If the application is approved, the applicant must pay a fee of Rs. 25,000/- plus applicable taxes within 15 days of receiving the communication for grant of registration from the Authority.

6. Grant of Certificate:

• Upon satisfaction with the application, the Authority will grant the certificate in ‘Form-B.’
• The Authority will also inform the applicant of the specific category in which registration has been granted.

7. Additional Categories:

• After one year of holding the corporate agency licence, an applicant can apply for registration in another category, provided the regulatory requirements are met.

Conditions for Corporate Agency Licence:

• Corporate agents must adhere to the code of conduct for insurance regulation business.
• They should exclusively solicit and service insurance business.
• Compliance with the Act, Regulations and Rules provided by the Authority is mandatory.
• Corporate agents must promptly inform the Authority of any material change or the provision of false/misleading information in previously submitted documents.
• Adequate grievance redressal measures must be in place, with grievances addressed within 14 days.
• Corporate agents must procure a reasonable number of insurance policies commensurate with their resources.
• Comprehensive record-keeping is required, including policy details and person-wise information on various policies.
• Multi-level marketing for solicitation of insurance-related products is prohibited.
• Maintenance of specific books of accounts for the business is necessary.
• Conflict of interest must be avoided during the solicitation process.

Rejection of Registration:

• Applications not meeting requirements will be rejected.
• The applicant has the right to be heard on the application's rejection.
• The Authority must communicate the refusal or rejection within 30 days of the decision.
• The applicant can appeal the rejection to the Securities Appellate Tribunal within 45 days of the Authority's rejection order.
• In case of rejection, the corporate agent may continue to serve existing clients with contracts already in place, subject to the contracts' expiration or six months, whichever is earlier. After this period, a new application to the insurer is required.

Validity and Renewal of Certificate of Registration for Corporate Agency Licence

In India, the validity and renewal process for a Corporate Agent Licence is governed by specific regulations. The validity and renewal procedures are as given below:

1. Initial Validity Period:

A Corporate Agency Licence is valid for three years from the date of issuance.

2. Renewal Fee and application:

The applicant is required to submit Form A and pay a renewal fee of Rs. 25,000/- along with applicable taxes for renewal processing. This must be done atleast 30 days before the expiry.

If an application for renewal is made after the licence has expired but before the actual expiry of the certificate, an additional payment of Rs. 100/- is required along with the application.

In cases of a delay in submitting the renewal application, the applicant must declare the delay and an additional fee of Rs. 750/- plus applicable taxes may be imposed.

3. Early Renewal:

Corporate agents have the option to submit a renewal application up to 90 days before the expiry of their existing licence.

4. Training Requirements:

Prior to seeking a renewal of registration, the Principal Officer and specified individuals associated with the corporate agent must have completed a minimum of twenty five hours of theoretical and practical training provided by an approved institution.

5. Renewal Approval:

If authority is satisfied with the information as per the renewal application, then the renewal of the licence will be granted.

The renewed certificate will be issued in "Form-C."

6. Renewal Period:

Upon successful renewal, the Corporate Agency Licence will remain valid for another three years from the date of renewal.

Why Choose StartupFino for Corporate Agency Licence in India?

The corporate agency licence authorises an organisation to function as a corporate agent for selling insurance for the insurance organisation. By following the dueprocedure of obtaining a corporate agency licence in India, entities can ensure that they are granted a Licence that meets the necessary standards and regulations to participate in the insurance industry ethically as well as responsibly.

StartupFino is a company that specialises in offering complete services for corporate agency Licence. We can help you with everything from providing advice in the initial phase to ensuring that you meet all the necessary requirements and compliances for your corporate agency licence and registration.