The first batch of prospective insurance brokers are slated to commence their training from Monday marking their entry into selling insurance products for a large number of companies under one roof.
As opposed to a life insurance agent who is permitted to sell the products of only one life insurance company and one non-life insurer, brokers have to mandatorily sell products of at least two companies in the first year and the number of insurers, whose products are stocked has to increase to at least four by the end of the third year.
Nine insurance brokerage outfits have approached RNIS College of Insurance in Delhi to impart the prescribed training to their managers.
The most high-profile among them is JLI Insurance Brokerage Company, which wants 40 of its staff members trained.
Those who will be trained include former top-level executives of Life Insurance Corporation and state-owned general insurance companies. Some employees of Escorts group-promoted Emerald, which is expected to tie-up with global brokerage major, Heath Lambert will also be imparted training.
In all around half-a-dozen private training institutes have received clearance from Insurance Regulatory and Development Authority (Irda).
After the prescribed training, all candidates will have to write a centralised test conducted by the Insurance Institute of India.
The regulator has classified brokers into three categories- direct (only for life and non-life), reinsurance and composite brokers (both direct and reinsurance business).
While capping foreign investment in insurance broking outfits at 26 per cent, the regulator has prescribed a minimum capital requirement of Rs 50 lakh for direct brokers, Rs 2 crore for reinsurance brokers and Rs 2.5 crore for composite brokers.
The guidelines have also stipulated that a brokerage outfit cannot receive more than 50 percent of the premium in the first year of business from a single client.
In the second year, business from one client is capped at 40 percent of the premium and from the third year onwards the cap has been put at 30 per cent.
The insurance regulator has defined a client to include an associate or a subsidiary or a group concern under the same management.
