IFSCA Official had issued a detailed framework for the establishment and operation of Insurance Intermediary Offices (IIIOs) within the GIFT City IFSC. The framework set by the International Financial Services Centres Authority (IFSCA) for Insurance Intermediary Offices (IIIOs) within GIFT City IFSC categorizes insurance intermediaries into two main types: insurance distributors and insurance claim service providers.
Insurance distributors encompass a range of brokers and agents, including:
Composite Broker: An insurance broker registered with the Authority who can solicit and arrange both insurance and reinsurance for clients, providing risk management services as permitted under the regulations.
Corporate Agent: A corporate entity registered to solicit and procure insurance business on behalf of an insurer.
Direct Broker: An insurance broker registered with the Authority who can solicit and arrange insurance business for clients with insurers, offering risk management services.
Reinsurance Broker: An insurance broker who, for a remuneration or fee, solicits and arranges reinsurance for clients with insurers and/or reinsurers, providing risk management services as permitted under the regulations.
Insurance claim service providers include:
Surveyor and Loss Assessor: Professionals who assess the damage or loss for insurance claims and provide a report to the insurer to determine the settlement amount.
Third Party Administrator (TPA): Entities that provide administrative services such as claims processing and customer service on behalf of insurers.
The IIIO framework ensures that these intermediaries operate within a structured and compliant environment, enhancing the efficiency and credibility of insurance operations within GIFT City IFSC.
This article outlines the key aspects for Insurance Brokers Under this framework.
Key Definitions
Insurance Broker: A person registered with the Authority under these regulations, who is a direct broker, a reinsurance broker, or a composite broker.
Insurance Self-Network Platform: An electronic platform set up by an intermediary or insurance intermediary for the purpose of distribution, procurement, or solicitation of insurance or reinsurance business.
Reinsurance Broker: An insurance broker registered with the Authority who, for a remuneration and/or a fee, solicits and arranges reinsurance for its clients with insurers and/or reinsurers and provides risk management services as permitted under these regulations.
Broker Qualified Person: An individual who is an employee or director of the insurance broker engaged in solicitation and procurement of insurance business and who has undergone training and passed the examination as specified by the Authority.
Composite Broker: An insurance broker registered with the Authority who, for a remuneration and/or a fee, solicits and arranges insurance and/or reinsurance for its clients with insurers and/or reinsurers and provides risk management services as permitted under these regulations.
Direct Broker: An insurance broker registered with the Authority who, for a remuneration and/or a fee, solicits and arranges insurance business for its clients with insurers and provides risk management services as permitted under these regulations.
Eligible Entities
Entities eligible for registration as a Composite Broker, Direct Broker, or Reinsurance Broker include:
A company incorporated under the Companies Act, 2013
A co-operative society registered under relevant laws
A limited liability partnership formed under the Limited Liability Partnership Act, 2008
Any other legal form as may be specified by the Authority
Eligible Business Activities
Direct Insurance Broker: Permitted to perform direct insurance business within IFSC, from other SEZs in India, and from outside India. Cannot solicit direct insurance business from the Domestic Tariff Area (DTA) except in accordance with Section 2CB of the Insurance Act.
Composite Broker/Reinsurance Broker: Permitted to perform activities within IFSC, in other SEZs in India, DTA, and outside India.
The IIIO must include "Insurance Broker", "Insurance Brokers", or "Insurance Broking" in their name to reflect their line of activity and differentiate them from non-registered entities. Foreign intermediaries can maintain their home country-approved names.
Capital and Net Worth Requirements
Minimum Capital Requirements:
Direct Insurance Broker: $100,000
Reinsurance Broker: $550,000
Composite Broker: $675,000
Minimum Net-Worth Requirements:
Direct Insurance Broker: $800,000
Reinsurance Broker: 60% of minimum capital requirement
Composite Broker: 60% of minimum capital requirement ($450,000)
Branch Office Requirements:
Direct Insurance Broker: $10,000
Reinsurance Broker: $55,000
Composite Broker: $67,500
Professional Indemnity Insurance
Every IIIO must maintain professional indemnity insurance throughout its registration period. This covers errors, omissions, negligence, fraudulent acts, loss of money or property, and loss of documents.
Indemnity Limits:
Direct Broker: Minimum USD 150,000, up to USD 700,000
Reinsurance Broker: Minimum USD 550,000, up to USD 10 million
Composite Broker: Minimum USD 700,000, up to USD 13.5 million
Business Conduct and Responsibilities
Activities and Functions of Insurance Brokers: Familiarizing with client’s business, rendering advice on insurance cover, maintaining a database of insurance markets, negotiating on behalf of clients, maintaining proper records of claims, and charging fees for risk management services.
Co-Broking: Joint handling of insurance requirements by two or more registered brokers, with written consent from the client.
Fee Structure
Application Fees: $500
Registration Fees: $1,000
Annual Fees: $2,000
Tax Benefits
100% Tax Exemption: Business profits are fully exempt for 10 years out of the first 15 years of operation.
Minimum Alternate Tax (MAT): Reduced MAT rate of 9% for IFSC units.
For more details, visit: Tax Benefits of GIFT IFSC
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