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In order to sell insurance products, one must first obtain an insurance company license from the insurance commissioner of that particular state. The introduction of the Insurance Regulatory Development Authority of India (IRDAI)) has brought about significant changes to the insurance sector overall. Moreover, it is the IRDAI that grants the permit for different classes of insurance businesses, including life insurance, fire insurance, and marine insurance. If the selling of insurance business is on an interstate basis, a license is required in every state where the business is carried out.
The registration of insurance company and issuance of insurance company license is regulated under the Insurance Regulatory and Development Authority of India (Registration of Indian Insurance Companies) (Seventh Amendment) Regulation, 2016.
As per a 2020 report, 57 insurance companies exist in India out of which 24 are in the business of life insurance, whereas the remaining 33 are in the business of insurance other than life insurance.
In order to initiate the procedure, the person who wishes to set up an insurance business has to first make an application using Form IRDA/R1 accompanied by the necessary documents, including:
The form IRDA/R1 is submitted for the issuance of the registration application.
If all goes according to plan and if the reviewing authority (IRDAI) finds the initial submission of Form IRDA/R1 satisfactory, the candidate may further apply for the issuance of the registration certificate in Form IRDA/R2.
If this application is made for the business of Life Insurance, General Insurance, or Health Insurance, there must be documentary evidence proving that the paid-up capital of the business is at least Rs.100 crore.
If the application is made for the business of Reinsurance, there must be documentary evidence proving that the paid-up capital of the business is at least Rs.200 crore.
The form will have to be submitted along with the following documents:
The reviewing authority shall grant the certificate of registration to the insurance company in Form IRDA/R3 if it is satisfied with all aspects of the application. However, if it is not satisfied with the application, it shall reject the same, and make known the rejection within 30 days of the order or rejection along with the reasons for the same. Within 30 days of the order of rejection being received by the applicant, he/she may prefer an appeal to the Securities Appellate Tribunal regarding the rejection.
Where the applicant has been granted the certificate of registration, he/she is obligated to commence the business within 12 months of receiving the registration certificate. If the applicant fails to do so, the registration shall stand lapsed. However, if the reason for non-commencement is genuine, the authorities may grant an extension of 12 months to the applicant to do the same.
An applicant will stand ineligible to file IRDA/R1 if:
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