Section 37(5) in Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2018
(5)The insurance brokers falling under this category shall have to abide by the following conditions:A) Obligations of the Insurer:(i)The insurer within the group should give an undertaking that -(a)it will not pay higher remuneration or reward to the insurance broker within the group compared to what is payable to other insurance brokers for the same class of insurance or insurance product;(b)it will not quote terms to the insurance broker within the group, that are more favourable than the terms quoted to other insurance brokers on the same proposal for insurance; and(c)it will not design special insurance products for sale exclusively through the insurance broker.(d)It will file an audit certificate on compliance with this undertaking annually with the audited accounts of the insurer;B) Obligations of the Insurance Broker:(i)The broker shall make an explicit disclosure of it being a sister company of the insurer within the same promoter group, in all its stationary used for communication with clients and in all publicity materials and at the offices of the broker.(ii)Where the insurance broker recommends a product and quotes rates and terms offered by an insurer within the same promoter group, the insurance broker shall inform the client about the logic in support of its recommendation and also inform the client about the next best product, rates and terms offered by an insurer not part of the promoter group.(iii)It shall be mandatory for the insurance broker to disclose Related Party transactions with the insurance company belonging to the promoter group in its audited accounts and balance sheet as described in the Accounting Standards.C) Obligations of both the Insurer and the Insurance Broker(i)The insurance company and the insurance broker shall maintain arms length distance between themselves. More explicitly, no employee or director of the insurance broker shall be a director, employee, or agent of the insurance company.(ii)The insurance broker shall not offer loans or other facilities or incentives to officers or employees of the insurer within the group and vice-versa.[For this purpose, "Group" shall be as defined in the IRDAI (Investment) Regulations, 2016 and Guidelines issued thereunder.]
