New Delhi: The Insurance Regulatory and Development Authority (IRDA) has suggested that composite insurance brokers carrying on both insurance and reinsurance broking should have a minimum net worth of Rs 3 crore.

In its draft regulations, IRDA has proposed a much lower net worth of Rs 25 lakh for brokers who only hold the licence for either direct life insurance or general insurance brokerage. Reinsurance brokers, however, should have to have a minimum net worth of Rs 2 crore. An insurance consultant’s net worth has been proposed at Rs 10 lakh.

A broker has been described as an intermediary who, for a consideration or otherwise, arranges insurance for clients with underwriting insurance companies and to whom an insurance broking licence has been granted.

An insurance consultant has been described as a person other than a broker who directly or indirectly represents or assists an insured or an insurer in negotiating insurance, disseminating information relating to coverage or rates, risk management and inspection of risk and assists the policyholder in matters relating to settlement of claims.

According to IRDA, for a partnership firm or a corporate body, the ‘net worth’ would mean the value of the capital contributed or the paid-up equity capital of a body corporate plus free reserves. The figure would be arrived at after deducting any losses carried forward and any loans advanced by the partners of the firm to its partners or by a firm or company to directors, and shareholders as the case may be, at the time of an application made to the authority.

The net worth should be in the form of assets that are easily realisable, IRDA has said. But for a company the net worth would mean only paid-up equity shares.

The authority also proposed that the foreign holding in a brokerage firm should not exceed 26 per cent. “In the case of an applicant being a firm or a company, no part of the capital of the applicant can be held by a non-Indian interest beyond 26 per cent of the net worth,” it has said.