IRDAI Insurance Broking / Web Aggregator License

An Insurance Broker, regulated by the IRDAI (Insurance Brokers) Regulations, 2018, provides advice and places insurance risks on behalf of clients, earning a brokerage from insurers. A Web Aggregator, regulated by the IRDAI (Web Aggregators) Regulations, 2017, operates a digital platform that compares and facilitates purchase of insurance products without providing personalized advice. The minimum capital for a Direct Broker is rupees seventy-five lakhs, while for a Web Aggregator it is rupees twenty-five lakhs. The compliance obligations and permissible activities differ materially between the two categories.

Yes. Foreign direct investment of up to seventy-four percent is permitted in insurance intermediaries, including brokers and web aggregators, under the automatic route, subject to compliance with FEMA regulations and the FDI policy. The foreign investor must meet IRDAI fit and proper criteria, and any change in shareholding after licensing requires prior IRDAI approval. Entities with foreign ownership must also ensure that the management and control of the licensed entity is Indian, as required under current policy.

The end-to-end process, from incorporation through to final license issuance, typically takes between six and nine months. Delays are most commonly caused by incomplete documentation, queries regarding the business plan, or the need to replace a proposed Principal Officer who does not satisfy IRDAI's qualification criteria. Engaging experienced professionals who understand IRDAI's current expectations can materially reduce the timeline by ensuring the first submission is complete and accurate.

Licensed brokers and web aggregators must file quarterly and annual returns with IRDAI, maintain prescribed records of all solicitations and placements, renew the license every three years, obtain prior IRDAI approval for any changes in shareholding or management, and comply with all circulars issued by IRDAI from time to time. The Principal Officer must remain continuously employed by the licensee, and any vacancy must be notified to IRDAI and filled promptly. Annual audited accounts confirming maintenance of the minimum net worth must also be submitted.

The Principal Officer of an insurance broker must hold a graduate degree from a recognized university and have passed the examination conducted by the Insurance Institute of India or hold any other qualification recognized by IRDAI. For web aggregators, IRDAI's web aggregator regulations prescribe specific qualification and experience requirements. In addition, the Principal Officer must have relevant experience in insurance, financial services, or a related field, the exact number of years depending on the category of license applied for.

Yes. Section 7 of the IRDAI (Insurance Brokers) Regulations, 2018 and the corresponding provisions of the web aggregator regulations require prior written approval from IRDAI before effecting any change in the shareholding pattern of a licensed entity, including transfers among existing shareholders. Failure to obtain prior approval can result in suspension or cancellation of the license. The application for prior approval must be accompanied by background checks and fit and proper declarations from the incoming shareholder.

An insurance broker or web aggregator license is valid for three years and must be renewed before the expiry date by filing a renewal application and paying the prescribed renewal fee. If the license lapses, the entity must cease all intermediation activities immediately. Operating after the expiry of a license attracts the same penalties as operating without a license under the Insurance Act, 1938. IRDAI may grant a grace period in certain circumstances, but this is discretionary and cannot be relied upon.

Yes, subject to IRDAI's corporate structure requirements being separately satisfied. An NBFC or other RBI-regulated entity that wishes to engage in insurance intermediation must either obtain an IRDAI license for the same entity (which IRDAI permits in some cases, subject to the entity meeting all capital and fit and proper requirements) or incorporate a separate subsidiary for the insurance business. IRDAI generally prefers a clean, dedicated entity for insurance intermediation to avoid regulatory arbitrage and conflict of interest concerns.