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Insutech Insurance Broking Services Private Limited

You Can Rely on "INSUTECH" - A House of Insurance Services

ISO 9001

Distinctive Features of Insurance Broking and Insurance Agency

Insurance Broker Insurance Agent
IRDA prescribes very stringent regulations for formation and licensing of an Insurance Broking Company. Minimum Annual Licence fee payable is Rs. 25,000/- IRDA Regulations for licensing an Agent is very simple.   Licence fee payable is Rs.250/- which is valid for three years.
The minimum capital base prescribed is Rs.50 Lacs No such requirement.
Regulation stipulates that 20% of the capital (i.e. minimum of Rs.10 Lacs) should always be kept deposited with any scheduled bank. There is no such requirement.
Duties and responsibilities of Broker as enumerated in the Brokers’ Regulations are all-encompassing viz. imparting knowledge of insurance, total Risk Management, arranging proper cost-effective insurance cover, claim consultancy services, etc.  A Broker may represent the Insured to insurer to negotiate Insured’s claims. Duties of Agents are limited, such as assisting the prospect in buying a proper insurance cover.  He acts as an intermediary to assist in furnishing any information relating to insurance cover or claim, if any, to insurer or insured s the case may be.   An Agent cannot represent the insured to negotiate claims.
Any default or deficiency in fulfilling the responsibilities causing financial loss to the client is actionable under Law. No action can lay against an Agent in his individual capacity for any of his negligent act or omission unless fraudulent intent is proved.   However, Insurer as Principal may be held responsible for such negligent action of Agent.
With a view to protect the interest of the insuring public, IRDA Regulations specifies that Broker should take out and maintain a valid Professional Indemnity Insurance Policy for prescribed limit covering legal liability arising out of professional negligence.  There is no such requirement.
An Insurance Broker is appointed by Insured for handling the insurance requirements of the latter and the broker is responsible to the Insured only.  To serve the interests of their client better, they maintain business connection with all Insurers.  Agent is appointed by the Insurer and therefore he can work for a solitary insurer only.
Insurance Broker is considered professionally competent Insurance Intermediary and therefore, IRDA Regulations stipulate that all officers / employees of the Broking Company responsible for soliciting and procuring insurance business should possess the qualification prescribed by IRDA. No such requirement except that the Agent has to pass Agent’s examination which is pre-condition for issue of Agency License.  
Insurance Broker can take up stand alone Claims Consultancy where policy is not serviced by them. Agent is not permitted to take up such job.