The Indian Insurance market has witnessed tremendous growth in the last years and expecting significant growth in the coming years. Today, in India we have a total of 55 players out of which 24 life insurance companies and 31 non-life insurance companies. In this article, we will have a look at how to register an Insurance company.
Every insurer seeking to carry out the business of insurance in India is required to obtain a certificate of registration from the IRDAI before the commencement of business. The pre-conditions for applying for such registration have been set out under the Insurance Act of 1938 and the various regulations prescribed by the Authority.
The registration for an Insurance company is divided into three parts i.e. R1, R2, R3.
Application for issuance of a requisition for registration:
- The applicant is a Company incorporated under Companies Act 2013: Certified copy of MOA and AOA;
- Name, Address, or occupation of the directors;
- Certified copy of the annual report of Indian promoters and foreign investors for the preceding last five years.
- Certified copy of the shareholding agreement between Indian Promoters and foreign investor of the applicant;
- A five-year business plan approved by the Board of Directors.
An applicant can file an application for life Insurance or General Insurance company or Health Insurance Business exclusively or Reinsurance Business.
After receiving an application, the Authority may ask for further information or clarification related to the consideration of an application.
After satisfaction, the Authority may grant approval and the applicant then file a further application in Form IRDAI/R2 for a grant of a certificate of registration.
The Authority may reject the application for issuance of a requisition for a registration form by recording the reason in writing.
An applicant who is aggrieved by the decision shall file an appeal to Securities Appellate Tribunal within 30 days of rejection communication received.
- The Authority has rejected the requisition for registration application or withdrawn;
- The foreign investors or Indian Promoter of the existed venture have exited for any reason at any
- The time during the preceding two financial years from the date of requisition for registration application;
- The Authority has rejected the application for registration or withdrawn by the applicant for any reason at any time during the preceding two financial years from the date of requisition for registration application;
- The Authority has canceled the Certificate of Registration; or
- The name of the applicant does not contain the words ‘insurance’ or ‘assurance’.
Once the authority accepts the application for requisition, the applicant shall apply in Form IRDAI/R2 for the grant of a certificate of registration. The application shall contain the following information:
- Application for Life Insurance/General Insurance/Health Insurance: Evidence stating that paid-up equity capital is more than Rs. 100 crore or more;
- Application for reinsurance business: Evidence is stating that paid-up equity capital is more than Rs. 200 crores or more;
- An affidavit from Indian as well as foreign promoters confirming that the paid-up equity capital is adequate after excluding preliminary expenses.
- Statement of shareholding containing the distinctive number of shares issued to promoters;
- If foreign investment in the applicant, an affidavit from CEO, MD, WTD of Indian developers, and foreign investor certifying that the holding of foreign paid-up equity capital is being calculated as mentioned under the Indian Insurance Companies (Foreign Investment) Rules, 2015 read with other rules related to it. Also, the foreign promoters can hold up to 49% of the paid-up capital of the applicant;
- FIPB approval if the FDI exceeds the limit of 26%;
- Certified copy of published prospectus;
- Certified copy of MOU or management agreement or shareholding agreement or voting agreement or any other agreement entered between the promoters;
- Proof of payment of fees of rupee five lakh, which is non-refundable;
- PCA or PCS certificate confirming the compliance of registration fees, equity share capital, other requirements of the Act;
The authority after receiving the application shall take into consideration the nature of insurance products, the level of actuarial, accounting, and other professional experts in the management, the organization structure.
After making an inquiry and satisfaction, the Authority grants the applicant the certificate in Form IRDAI/R3.
The Authority may reject the application if he does not feel satisfied with the information provided by the applicant.
The rejection shall be communicated to the applicant within thirty days from the day of the order of rejection passed with the ground of rejection. An applicant can appeal to the SAT within 30 days of receipt of the rejection order.
The applicant who is granted a certificate shall commence a business within 12 months from the grant of a license. The extension can be sought from the authority but cannot take an extension for more than 24 months.
The following are the causes for the suspension of a license of an Insurance Company:
Fails to comply with the provisions of the activities related to the value of assets and liabilities.
The insurer is in liquidation or is adjudged as insolvent.
The business or a class of the business of the insurer has been transferred to any person or has been transferred to or amalgamated with the business of any other insurer without the approval of the Authority.
Default in complying with the provisions of the Act, or Rule or Regulations, or direction or order issued by the Authority.
Any claim remains unpaid for more than 3 months after the judgment is passed in court.
Insurer carries business other than Insurance business or prescribed business.
Defaults in complying with the requirement of Companies Act, 2013, General Insurance Business Act, 1972 or Foreign Exchange Management Act, 1999 or Prevention of Money Laundering Act, 2002.
Fails to pay the annual fees specified under Act.
The insurer is convicted of an offense under any law.
Why insurance companies need license?
An insurance company license gives the person an authority to seek and sell insurance items. State insurance commissioner is responsible to issue the license for the purpose of seeking and selling the insurance and is isolated into various insurance types, including life and inability, health, auto or worker’s compensation.
What is the scope of IRDA?
1) The arrangement of activity of getting license of insurance from IRDA;
2) The way toward getting approval of insurance items from IRDA; and
3) The methodology for appointment of insurance intermediary.
What are the documents required to obtain insurance company license?
- Applicant is a company formed under Companies Act 2013
- Certified of MOA and AOA
- Details of the directors such as- name, address and occupation
- Certified copy of the annual report of Indian promoters and foreign investors for the preceding last five years
- Certified copy of the shareholding agreement between Indian Promoters and foreign investors of the applicant
- Five-year business plan accepted by the Board of Directors
Who regulates insurance companies in India?
The essential controller for insurance in India is the Insurance Regulatory and Development Authority of India (IRDAI) which was built up in 1999 under the administration enactment called the Insurance Regulatory and Development Authority Act, 1999.
Who has the authority to cancel the license of an insurance agent?
The designated person may cancel a licence of an insurance agent, if the insurance agent suffers, at any time during the currency of the licence, from any of the disqualifications mentioned in sub-section (4) of section 42 of the Act, and recover from him the licence and the identity card issued earlier.
What do you mean by Insurance Repository?
“Insurance Repository” signifies an association shaped just as ensured under the Companies Act, 1956. It is an association that has been given a testament of enrolment by Insurance Regulatory alongside Development Authority (IRDA) for up keep of information of protection arrangements in Electronic structure for its Insurers. The Insurance Repositories allows the unwinding of holding protection arrangements conveyed in an electronic structure.
Which is the largest general insurance company in India?
New India Assurance Company Limited