The Insurance Regulatory and Development Authority ( Irda) said on Thursday banks should obtain prior approval of the Reserve Bank of India (RBI) before applying for a licence to act as an insurance broker. In its notification on licensing banks as insurance brokers, Irda said banks should apply under the direct broker category. The licence, once granted, will be valid for three years.
There is no requirement of capital for entities licensed under this particular regulation. To qualify for the licence, each bank will have to have the principal officer — an officer of general manager or equivalent category, who is appointed exclusively to carry out functions of an insurance broker. Irda said such banks cannot have more than 50 per cent of the premium from one client.
The notification adds: “Not more than 25 per cent of insurance handled by the insurance broker in any financial year is placed with the insurance company within the promoter group, separately for life and general insurance business.” Irda said that as an eligibility criterion, the applicant should have two persons who have 100 hours of theoretical and practical training from an institute recognised by it and have passed the examination at the end of the training period from recognised bodies.
Such licensed brokers will have to mandatorily take professional indemnity insurance. According to the regulation, such insurance brokers (banks) have to maintain separate accounts for insurance broking business and Irda can appoint appropriate officials to investigate into the books of accounts of such brokers.
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