Insurance Intermediaries: formula sheet

Key formulas

Role of the Authority over intermediaries (IRDA Act, s 14(2)(c))

IRDAI specifies qualifications, code of conduct and practical training for intermediaries and agents

Also s 14(2)(d) covers the code of conduct for surveyors and loss assessors.

Premium in advance (Insurance Act, s 64VB(1))

No risk assumed until premium is received, guaranteed, or deposit made in advance in the prescribed manner

Applies to risks in India where premium is not ordinarily payable outside India. The Central Government may relax it for certain categories by rules.

Agent's remittance duty (s 64VB(4))

Premium collected must be deposited or posted in full, without deducting commission, within 24 hours (excluding bank and postal holidays)

Commission is paid separately by the insurer.

Refund of premium (s 64VB(3))

Refund paid directly to the insured by crossed or order cheque or postal money order, with a receipt; never credited to the agent's account

Protects the policyholder from diversion of money.

Prohibition of rebates (Insurance Act, s 41)

No person may offer or accept a rebate of commission or premium, except as allowed in the insurer's published prospectuses or tables

Penalty may extend to ten lakh rupees.

Agent vs broker test

Agent / corporate agent → acts for the insurer; Broker → acts for the client

Use this one line to open any compare-and-contrast answer.

Prohibited agent categories (Sec 42A(1), Insurance Act, 1938)

No principal agent, chief agent or special agent may be appointed by an insurer

Applies to insurers on or after commencement of the Insurance Laws (Amendment) Act, 2015.

Multilevel marketing (Sec 42A(2))

No person shall offer an inducement to take out, renew or continue a policy through a multilevel marketing scheme

The Authority may, through an authorised officer, complain to the police.

Surveyor qualification (Sec 64UM(1))

Surveyor or loss assessor must (a) hold specified academic qualifications and (b) be a member of the Indian Institute of Insurance Surveyors and Loss Assessors

For a firm or company, all partners or directors who may make a survey must meet both conditions.

Surveyor report on claims (Sec 64UM(4))

Claim at or above the amount specified by the Authority in regulations → insurer needs a report from an approved surveyor or loss assessor, unless the Authority directs otherwise

The insurer may still settle at an amount different from the surveyor's assessment.

Insurer's payment for survey (Sec 64UM(7))

Fee for surveying or reporting on a claim → only to an approved surveyor or loss assessor

Sub-section (8) allows another person for small claims where an approved surveyor would be disproportionately costly.

General duty (s.14(1))

Regulate + promote + ensure orderly growth of insurance business and re-insurance business

Subject to the Act and any other law in force.

Registration power (s.14(2)(a))

Issue certificate of registration; renew, modify, withdraw, suspend or cancel it

Applies to applicants for registration. Know all five actions after issue.

Policy-holder protection (s.14(2)(b))

Assignment, nomination, insurable interest, claim settlement, surrender value, other contract terms

Six named matters plus terms and conditions of contracts.

Intermediary standards (s.14(2)(c), (d))

Qualifications + code of conduct + practical training for intermediaries, insurance intermediaries and agents; code of conduct for surveyors and loss assessors

Surveyors and loss assessors get a code of conduct in clause (d).

Supervision (s.14(2)(h))

Call for information, inspect, enquire, investigate, audit

Covers insurers, intermediaries, insurance intermediaries and other connected organisations.

Financial control clauses

(j) books and accounts; (k) investment; (l) solvency margin

Clauses (i) rates and terms relate to general insurance business.

Regulation-making (s.114A, Insurance Act 1938)

Regulations by Gazette notification, consistent with Act and rules, laid before Parliament for 30 days

Source of detailed licensing and conduct rules.

Qualifications, code of conduct and training

IRDA Act s.14(2)(c): Authority specifies qualifications + code of conduct + practical training for intermediaries, insurance intermediaries and agents

Core power. Quote it for any question on standards of entry and conduct.

Code of conduct for surveyors and loss assessors

IRDA Act s.14(2)(d)

Separate clause. Do not merge it with clause (c).

Registration of applicant

IRDA Act s.14(2)(a): issue, renew, modify, withdraw, suspend or cancel

Registration is a certificate issued to the applicant, covering the full life of the registration.

Adjudication of disputes

IRDA Act s.14(2)(m): disputes between insurers and intermediaries or insurance intermediaries

This is about disputes between insurer and intermediary, not policy-holder claims.

Remuneration regulations

Insurance Act s.114A(2)(jd): manner and amount of remuneration or reward by way of commission or otherwise

Applies to agents, intermediaries and insurance intermediaries.

Licensing regulations for intermediaries

Insurance Act s.114A(2)(q) to (v): licence manner and fee, renewal fee, qualifications and training, examination, code of conduct, duplicate licence fee

Each item is a separate matter on which regulations may be made.

Laying of regulations

s.114A(3): laid before each House for 30 days in total

Modification or annulment does not affect things already done.

Establishment

Authority may, by notification, establish the Committee from a specified date

Discretionary power ("may"). Notification is required.

Size

Members ≤ 25, excluding ex officio members

Upper limit only. Ex officio members are outside the count.

Representation

Commerce, industry, transport, agriculture, consumer fora, surveyors, agents, intermediaries, safety and loss prevention organisations, research bodies, employees' association

Interests represented in the insurance sector.

Ex officio members

Chairperson and members of the Authority = ex officio Chairperson and members of the Committee

The Authority's head chairs the Committee.

Objects

Advise the Authority on making regulations under Section 26; plus other prescribed matters

Advisory only. The other matters are those prescribed.

Quick revision

• An insurance intermediary acts between insurer and customer in soliciting, placing or servicing insurance business.
• IRDA Act Section 14(1): the Authority must regulate, promote and ensure orderly growth of insurance and re-insurance business.
• Section 14(2)(a): the Authority issues, renews, modifies, withdraws, suspends or cancels registration.
• Section 14(2)(c): the Authority specifies qualifications, code of conduct and practical training for intermediaries, insurance intermediaries and agents.
• Section 14(2)(d): the Authority specifies the code of conduct for surveyors and loss assessors.
• Section 14(2)(m): the Authority adjudicates disputes between insurers and intermediaries or insurance intermediaries.
• Section 14(2)(n) now covers penalty under section 102 of the Insurance Act, as substituted w.e.f. 5 February 2026.
• Insurance Act Section 42(2): no person may act as agent for more than one life insurer, one general insurer, one health insurer and one of each other mono-line insurer.
• Section 42(4): acting as an agent in contravention can attract a penalty up to ₹10,000; an insurer appointing such a person can face up to ₹1 crore.
• Section 42(5): the insurer is responsible for all acts and omissions of its agents, including code of conduct violations.
• IRDA Act Section 25: the Insurance Advisory Committee has not more than 25 members excluding ex officio members; the Authority's Chairperson and members are ex officio. Its object is to advise on regulations under section 26.

Common mistakes

• Saying all intermediaries act only for the insurer. Fix: Say agents mainly act for the insurer and brokers are generally seen as acting for the client, in line with the IRDAI regulations.
• Believing an agent may deduct commission before remitting premium. Fix: Remember s 64VB(4): the full premium goes to the insurer within 24 hours, without deduction of commission.
• Saying a broker acts for the insurer. Fix: Remember that commission is a payment route, not the principal. A broker represents the client; an agent represents the insurer.
• Thinking a corporate agent is the same as a broker because both are firms. Fix: Check the representation test. A corporate agent is tied to the insurer. A broker is for the client.
• Treating the clause list in section 14(2) as exhaustive. Fix: Remember it is "without prejudice to the generality" of sub-section (1). The general duty is wider.
• Saying the Authority controls rates for all insurance business. Fix: Clause (i) speaks of rates, advantages, terms and conditions in respect of general insurance business.
• Saying the Authority can only specify a code of conduct and not qualifications or training. Fix: Recall the trio in s.14(2)(c): qualifications, code of conduct and practical training.
• Applying clause (c) to surveyors and loss assessors. Fix: Surveyors and loss assessors have their own clause, s.14(2)(d).
• Saying the Central Government establishes the Committee. Fix: Under Section 25 it is the Authority that establishes it, by notification.
• Writing that the Committee has exactly twenty-five members. Fix: Say "not more than twenty-five, excluding ex officio members".

Exam tips

• Write the section number next to each rule, such as s 64VB or s 14, but only the ones you are sure of.
• In case questions, quote the fact that breaks the rule, such as deduction of commission or delay beyond 24 hours.
• For role questions, structure the answer along the policy life: sale, premium, service, claim.
• MCQs often test who may do what, so learn the difference between agent and broker and the premium rules.
• Close descriptive answers with the policyholder protection angle, since IRDAI's duty is to protect their interests.
• Open every agent-versus-broker answer with the 'whom does it act for' line. It earns marks quickly.
• For surveyor questions, quote both conditions of Section 64UM(1): academic qualifications and membership of the Indian Institute of Insurance Surveyors and Loss Assessors.
• In MCQs, watch for options that call principal or special agents valid, or that treat the surveyor's report as binding. Both are wrong.