Insurance Company Registration

Introduction

Welcome to CorpIQ comprehensive guide on insurance company licenses in India! In the vast financial landscape of India, insurance plays a crucial role in offering protection against unforeseen events and uncertainties. The Insurance Regulatory and Development Authority of India (IRDAI) is the regulatory body overseeing insurance in India.

Insurance companies need to obtain licenses from their respective state's insurance commissioner before they can sell insurance products. Several significant changes have taken place in the insurance sector since the Insurance Regulatory Development Authority of India (IRDAI) was established. Moreover, the IRDAI grants permits to various classes of insurance businesses, including life insurance, fire insurance, and marine insurance. When selling insurance business interstate, licenses are required in each state where the business is conducted.

Registration of Indian Insurance companies and the issuance of insurance company licenses are governed by the Insurance Regulatory and Development Authority of India (Registration of Indian Insurance Companies) (Seventh Amendment) Regulation, 2016. India's insurance sector is teeming with opportunities, but it's essential to navigate the licensing process with clear understanding and precision. This guide aims to offer clarity on the available licenses to potential insurers. Always ensure thorough due diligence and consider consulting with industry experts when venturing into India's insurance domain.

Before venturing into the insurance sector, it's imperative to understand the various licenses available.

1. Life Insurance License

This license allows companies to offer products covering the life and health of an individual. Products may include term insurance, endowment plans, ULIPs, and more. Companies planning to provide coverage against death, retirement pensions, and health-related issues.

2. General Insurance License

Under this license, companies can offer a variety of non-life insurance products such as motor insurance, home insurance, travel insurance, etc. Entities looking to cover non-life risks for both individuals and properties.

3. Health Insurance License

Specifically dedicated to health-related coverages, this license allows insurers to offer products that cover medical expenses arising from sickness or injury. Companies exclusively focusing on health and critical illness insurance products.

4. Reinsurance License

Reinsurers take on a portion of the risks underwritten by the primary insurance companies. This license allows entities to provide reinsurance services in India. Companies planning to offer risk mitigation to primary insurance providers.

5. Composite Insurance License

A less common license, it allows companies to conduct both life and general insurance business. However, as of the latest regulations, new composite licenses aren't typically issued. Existing companies with this license or those with special permissions.

APPLICATION & REGULATORY PROCESS:

Step 1: Submit an application to IRDAI with the intended insurance business type.

Step 2: Undergo a thorough vetting process by the regulatory body.

Step 3: Post approval, adhere to IRDAI's regulations, capital requirements, and other operational criteria.

Step 4: Regular audits and compliance checks to ensure consumer protection.

FEATURES OF INSURANCE COMPANY:

• The purpose of an insurance company is to protect you from mishaps, illnesses, or damage to your property in the event of an accident.
• Different types of insurance companies exist depending on their legal constitution, and include mutual insurance companies, corporations, cooperatives, and mutual insurance companies for social security.
• Investors and insured are continually regulated to ensure the highest level of trust.

 

DOCUMENTS REQUIRED TO OBTAIN A LICENSE FOR INSURANCE COMPANY:

To apply for a license as an insurance company, the applicant must file form IRDAI/R1 with the IRDAI for an application for registration.

The application will be supported by the following documents:

• The applicant is a company formed under the Companies Act 2013.
• Certified copy of MOA and AOA.
• Information about the Directors, such as their names, addresses, and occupations.
• A certified copy of the last five-year annual report of Indian promoters and foreign investors.
• Certificate of shareholding agreement between Indian Promoters and foreign investors of applicant.
• Business plan approved by the Board of Directors for the next five years.

 

PROCESS OF OBTAINING AN INSURANCE COMPANY LICENSE:

• For the issuance of the registration application, the form IRDA/R1 must be completed.
• Upon the approval of the reviewing authority (IRDAI) for the initial submission of Form IRDA/R1, the candidate may then apply for issuance of the registration certificate in Form IRDA/R2.
• This application must include documentary evidence that the business has a paid-up capital of at least Rs.100 crore if it is for Life Insurance, General Insurance or Health Insurance.
• Documentary evidence must be provided proving that the paid-up capital of the business is at least Rs.200 crore for applications in the reinsurance business. You will need to submit the following documents with the form:

• Despite the exclusion of preliminary expenses, the affidavit provided by Indian promoters and foreign investors confirms that the paid-up capital available is adequate.
• Copies of the prospectus that have been certified.
• A document proving the payment of a Rs. 5 lakh non-refundable fee.
• The document certifies that the 26% ceiling is being adhered to by foreign investors and the FDI Rules are being adhered to.
• As required, certification from practising Chartered Accountant or Company Secretary.

A certificate of registration shall be granted to the insurance company in Form IRDA/R3 if all aspects of the application are satisfactory to the reviewing authority. However, if the application is not satisfactory, the Board may reject the same and notify the applicant, along with reasons for the rejection, within 30 days of the decision or rejection.

The applicant may appeal a rejection decision to the Securities Appellate Tribunal within 30 days after receiving the order of rejection. When the applicant receives a registration certificate, he/she must commence business within 12 months of the date of receipt. A failure to do so will result in the registration lapsed. However, the authorities may extend the time period of 12 months if the reason for the non-commencement is genuine.