Insurance broking licence is classified into 3 types in India:- Direct broker, Reinsurance broker and Composite broker. The direct broker deals with general insurance, life insurance and health insurance. Reinsurance broker deals with reinsurance business such as placing the Reinsurance business with reinsurers. Composite insurance broker deals with both direct and Reinsurance business.
The minimum capital requirement for registration for direct insurance broker is ₹75 Lakhs, for reinsurance broker it’s ₹4 Crore and for composite insurance broker it’s ₹5 Crore.
An insurance broker acts as an insurance intermediary and provides insurance related advice to the customers. An insurance broker helps to negotiate the insurance premium with the insurance company on behalf of the customer.
- Build a strong base:- The first and foremost thing for every insurance broker starting business is to build a strong base in the market. There is much scope and space for new insurance brokers in the market. The base should be built such that it would come handy in the long run.
Any new business survives on a strong base without which the insurance broker would face issues in the long term. The strong base built during the early stages helps the insurance broker break even in the later stages of operation.
- Networking:- The power of networking is underestimated by most of the insurance brokers in the market. Networking is the basic thing required to acquire new clients and retain existing clients. Networking brings new clients in the long run. Word of mouth is the best way of Networking in the insurance market. Word of mouth can bring more customers than you can imagine. The referrals would bring in more clients in the long run.
- Invest time & energy:- The other thing required to achieve success as an insurance broker is to invest the time and energy in acquiring new clients and servicing the existing clients. When a new insurance broker is formed everything must be started from scratch which means more time and energy is required to be invested in the process.
The time and energy required for a new broker would be higher than that of an existing broker. The higher the time and energy spent, the faster it would take to streamline the process.
- Be compliant with local laws:- The important thing to remember for a new insurance broker to be compliant with the local laws. All the local laws should be studied beforehand so that you don’t run into problems with the authorities. Insurance regulatory and development authority of India lays down laws for insurance companies and intermediaries in India.
Any deviation with local laws would be dealt with strictly in India by the IRDA which is the regulatory body for insurance related businesses.
- Never give up attitude:- For any new insurance broker to be successful in the insurance market, never give up attitude should be adopted. As per a research, a deal would be closed in the 4rth/5th follow-up which means that the insurance broker should not give after first few follow-ups.