How To Start An Insurance Brokerage In South Africa?

Obtaining a license is a crucial step in the process of becoming an insurance broker. A broker’s license is required in each state where you intend to work. Life, personal, property, and casualty insurance licenses are all accessible. Broker’s and agent’s licenses are not the same thing, yet you can still hold an agent’s license and work for companies as an agent as a broker. Some states are eliminating the distinction between the two types of licenses, forcing both agents and brokers to get a producer’s license. Both agents and brokers are referred to as producers in the insurance market.

DOCUMENTATION REQUIREMENTS

At least two directors/partners must sign the declaration and the application form.
In the case of a company, the Memorandum and Articles of Association, or in the case of a partnership firm, the Partnership Deed.
The auditor has duly reviewed and validated a detailed statement of the company’s shareholding pattern, which includes the names of the shareholders, the number of shares held, share certificate numbers, and folio numbers.
Individual shareholders’ IT returns for the previous three years, coupled with their net worth certificates and affidavits proving the source of invested funds
The shareholder firm’s board of directors passed a resolution on the investment in the company.
If the shareholding company is an NBFC (non-banking finance company), the RBI NA will issue a No Objection Certificate.
Detailed CV and documented testimonials, including the Principal Officer’s training certificate.
The qualifications and training of the individuals, as well as their testimonies and training certifications.
List of people in charge of obtaining insurance business, together with their references.
Revenue account, profit and loss account, and balance sheet projections for the following three years.
Affidavit stating that you have not been disqualified under Section 42 D of the Insurance Act.
The company’s directors and staff agree not to hold any directorships or employment in any other insurance firm.
Any director/employee who does not hold an agency/surveyor/TPA license must sign an undertaking.
Assurance that no one related to the applicant has ever been denied a license by the authorities.
The Principal Officer swears that the code of conduct will not be broken.
Undertaking that the applicant is not involved in any other company save the purposes stated in the MOA/Partnership Deed.

POINTS TO CHECK

Whether the organization complies with the minimum capital requirements as set forth in the Regulations.
Is the Fixed Deposit of 20% of the initial capital made in a scheduled bank?
The principal officer possesses the necessary qualifications, has passed the Brokers exam, and has undergone the necessary training.
At least two people with the necessary qualifications and training are hired by the company.
It has the necessary infrastructure and skilled personnel to operate an insurance brokerage firm.
The people in charge of obtaining insurance business are qualified and well-trained.
Two directors should sign the declaration that is part of the application format.
Payment of the required fee, as determined by the kind of insurance broker, by demand draft payable in Hyderabad, as required by Schedule II of the IRDA (Insurance Brokers) Regulations, 2002.
The Registrar of Companies has produced a printed copy of the Memorandum and Articles of Association. Regulation 9(2) (H) of the IRDA’s (Insurance Brokers) Regulations, 2002 shall be the major goals of the Memorandum and Articles of Association. (It must be verified that the MOA/principal AOA’s objectives are strictly limited to insurance brokerage activity.) Furthermore, the capital clause prohibits the corporation from having capital in any form other than equity, and there shall be no voting power differentiation.)
The applicant should take steps to ensure that the training requirements outlined in regulation 9 (2) are met (F). The training requirement set forth in section 9 (2) (F) of the IRDA (Insurance Brokers) Regulations, 2002 must be met before any application for a license can be considered.
In a broking firm that meets Regulation 9’s standards, one Principal Officer must be present.
(1) The applicant certifies that the Principal Officer has not broken the code of conduct set forth in Schedule III of the IRDA (Insurance Brokers) Regulations, 2002, and that no complaint has been filed against him as of the date. (2) The Principal Officer is appointed only to carry out the activities of an Insurance Broker under Regulation 2 (1) (k) and is not a director, employee, or agent of any other insurance-related or other company, either full-time or part-time.
Information on whether any person linked with the application company holds an insurance agency or insurance surveyor’s license in his or her role as a director, shareholder, promoter, key management staff, or employee. If so, please provide all relevant information. According to the rules, no agent or surveyor can act as a broker. The applicant should take steps to close the agencies and provide documentation to the Authority to prove it.
All of the directors’ CVs are detailed, showcasing their history and current activity.
Detailed CVs and attested copies of testimonials of the principal officer’s and key management personnel’s educational qualifications.
The applicant (directors, principal officer, key management staff, and employees of the company) must provide an affidavit, duly notarized, verifying that none of the disqualifications stated under sub-section 42 D of the Insurance Act, 1938 apply to them.
List of all present and proposed shareholders of the application company.
Employees who will be in charge of seeking and obtaining insurance business, as well as their qualifications
Details of statutory auditors and principal bankers, as well as the applicant’s bank account number.
If the shareholder is a firm or a group of firms, determine whether they are Non-Banking Finance Companies. If yes, send a Reserve Bank of India No Objection Certificate for marketing and investing in Applicant Company. If not, a certificate from the statutory auditors is required.
Provide the Board Resolution made by it/them in promoting and investing in Applicant Company if the shareholder is a firm/firms.
If the shareholder is a firm or a group of firms, send an audited annual report, a three-year balance sheet, and verified copies of income tax returns.
Individual promoters must present certified copies of their income tax returns, balance sheets duly certified by auditors for the last three years, and net worth certificates certified by CA.
Explain the applicant company’s current activities in detail.
Clarification on how the applicant company intends to handle its existing clients, business, and liabilities after it enters the insurance broking sector.
The company’s name must include the terms ‘Insurance Broker’ or ‘Insurance Broking’ to indicate its line of business, which is insurance broking.
Details of the registered office’s infrastructure, including ownership/lease agreement paperwork for office space/equipment/trained manpower, and future plans for creating branch offices in other locations across the country, as well as the projected time frame with images of the premises.
The revenue account, the profit and loss account, and the balance sheet for the projected three years are drawn from projections of administrative expenses, salaries and wages, and other expenses.
The organization chart depicts the company’s many functions, such as IT, underwriting, risk assessment, claims settlement, marketing, accounts, and back office.
List of experienced employees with good knowledge and experience working in the fields of risk assessment, underwriting, and claims management, etc., who have been inducted from a general and life insurance background. To the Authority, submit a complete CV, copies of educational qualifications, and appointment/joining letters for the candidates who have been chosen.
Any involvement by any other Regulatory Authority on the Promoters / Management / Applicant Company as of the date must be declared by the applicant.
Confirmation that the contents of Circular Ref: 063/IRDA/Memo/07-08, dated March 18, 2008, have been followed ( if applicable)
Any other information relevant to the kind of services given by the applicant for the growth and marketing of the insurance business should be recorded.
Following the completion of the prerequisites, the applicant must appear before the Authority for a presentation of business plans related to the application.
The applicant business must present a document, fully attested by the auditors, detailing the names of the shareholders, the number of shares owned, the percentage of shares held, share certificate numbers, folio numbers, and other information, as well as its authorized and paid-up capital position.
The applicant company must present a certificate from the auditors detailing its current resource deployment.
A bank certificate showing the current balance in the applicant company’s account must be submitted.
The company’s directors/employees must provide an undertaking that none of the company’s directors/employees are directors/employees of, or represent, any other insurance-related firm.
The Director and Principal Officer must sign an agreement stating that the broking premises, including branch locations, shall be utilized solely for the broking company.
Take out a single FD in accordance with Regulation 22 for a minimum term of three years for a sum equal to 20% of the initial capital and submit a letter from the bank stating that the Authority has a lien on the FD and that no amount shall be released without the Authority’s prior permission, and no loan shall be released against it.
To achieve compliance with Regulation 10, the minimum Paid Up Capital for Direct Brokers, Reinsurance Brokers, and Composite Brokers will be Rs.50, Rs.200, and Rs.250 lakhs, respectively.
After receiving in principle approval, the applicant must present documentation of surrender of agency licenses/corporate agency licenses, as well as confirmation from insurers. (When appropriate)

How much do you need to start an insurance company in South Africa?

A long-term insurer/reinsurer must have ZAR10 million in capital, whereas a short-term insurer/reinsurer must have ZAR5 million.

What qualifications do I need for insurance broking?

An Insurance Broker’s goal is to identify the correct insurer to meet a client’s individual needs; they use their market knowledge to obtain the best amount of coverage at the lowest price.

Insurance Brokers are usually professionals in a specific industry, such as property insurance, financial insurance, or aviation insurance. They will be compensated through commission for making a transaction, thus the Financial Conduct Authority (FCA) operates as the UK’s governing agency to keep them objective and fair. Smaller brokerage businesses often advise on various types of insurance, but larger brokerage firms typically specialize in one type of insurance.

Most people will begin their careers as an insurance technician, junior account handler, or trainee broker, and work their way up. Most companies require GCSEs with grades 9 to 4 (A* to C), including English and arithmetic, as well as A levels to be hired.

How do I become a financial broker in South Africa?

The Johannesburg Stock Exchange, the continent’s largest stock exchange, is located in South Africa. It’s also regarded as an innovation hotspot, with job prospects in banking, technology, and manufacturing. The South African Institute of Stockbrokers (SAIS) regulates brokerage firms, with the goal of upholding the highest standards of conduct in the industry.

Step 1- Filling up the IRDA/R1 form and submitting it to IRDA (IRDA Licence)

An applicant who wishes to do insurance business in India must submit an IRDA/R1 demand for registration application. After the Authority has approved the applicant’s demand for registration, the applicant must submit an application for a certificate of registration in Form IRDA/R2.
The corporation must be a Public Limited Company under the Companies Act 2013 or the Companies Act 1956 to be deemed an insurance company.
Each type of insurance-related business requires a certificate of registration. In essence, a certificate of registration for life insurance and a certificate of registration for general insurance will be issued.
The Memorandum of Association and Articles of Association must be certified. If the applicant is a corporation incorporated under the Companies Act 2013 or the Companies Act 1956, this would be the case.
A statement identifying the sources of funding for the required share capital.
The authority will grant the IRDA/R2 form for certificate of registration once the IRDA/R1 form has been completed.

Step-2- Authority Satisfied with IRDA/R1 and Grants Form IRDA/R2 for the applicant to make further registration

Section 7 of the Act requires documentary proof of the deposit being made.
If the application for a certificate is for a life insurance business or a general insurance business, evidence of a paid-up equity share capital of rupees one hundred crore or more;
If the application for a certificate is for reinsurance business, evidence of possessing at least Rs. 200 crore in paid-up equity share capital;
Affidavit signed by the applicant’s senior officer and promoters certifying that the paid-up share capital requirements are sufficient after deducting any preliminary expenses incurred in the company’s creation and registration, as well as the deposit made by the company;
A statement detailing the unique numbers of shares issued to each promoter and shareholder in the applicant’s share capital;
An affidavit signed by the applicant’s principal officer and promoters certifying that the paid-up equity capital does not exceed 26%.
A certified copy of the insurer’s standard forms and statements of the assured rates, advantages, terms, and conditions to be offered in connection with insurance policies, as well as a certificate from an actuary that such rates, advantages, terms, and conditions are workable and sound in the case of life insurance business;
A certified copy of the memorandum of understanding (MOU) signed between the Indian promoter and the foreign promoter, or between all of the promoters, including details of the support comfort letters sent between the parties;
The genuine receipt shows the payment of a fare of Rs. 50,000 for a business class;
A certificate from a practicing chartered accountant or a practicing company secretary attesting that the applicant has met all of the requirements for registration fees, share capital, deposits, and other papers;
any additional information requested by the authorities in the course of processing the registration application; and
A bank draft issued by any scheduled bank in favor of the Insurance Regulatory and Development Authority payable in New Delhi shall be used to pay the registration fee of Rs. 50,000 for each class of business.

Step 3- Applicant to start insurance business within 12 months of the date of registration (IRDA/R3 Form)

If all of the requirements are met and the authority feels the company is sound and fit to conduct insurance business, the certificate Form IRDA/R3 will be issued.
The applicant who has been issued a certificate of registration must begin doing business in the insurance industry within 12 months of the date of registration.
If the applicant company does not believe it will be able to begin operations within 12 months, it must request a 12-month extension from the authority before that time runs out.

What is broking license?

An individual or a corporation that wants to serve as a middleman between insurance firms and potential insurance policy clients must first get an Insurance Broker License. Insurance Brokers in India are governed by the Insurance Regulatory and Development Authority of India (IRDAI).

What regulates insurance companies in South Africa?

The Insurance Act governs the prudential standards of all insurers and reinsurers operating in South Africa, including Lloyd’s and overseas reinsurer branches.