Section 24 in The Insurance Regulatory And Development Authority (Insurance Brokers) Regulations, 2002
24. Professional indemnity insurance .-(1) Every insurance broker shall take out and maintain and continue to maintain a professional indemnity insurance cover throughout the validity of the period of the license granted to him by the Authority:
Provided that the Authority shall in suitable cases allow a newly licensed insurance broker to produce such a guarantee within fifteen months from the date of issue of original license.(2)The insurance cover must indemnify an insurance broker against-(a)any error or omission or negligence on his part or on the part of his employees and directors;(b)any loss of money or other property for which the broker is legally liable in consequence of any financial or fraudulent act or omission;(c)any loss of documents and costs and expenses incurred in replacing or restoring such documents;(d)dishonest or fraudulent acts or omissions by brokers' employees or former employees.(3)The indemnity cover-(a)shall be on a yearly basis for the entire period of license;(b)shall not contain any terms to the effect that payments of claims depend upon the insurance broker having first met the liability;(c)shall indemnity in respect of all claims made during the period of the insurance regardless of the time at which the event giving rise to the claim may have occurred:Provided that an indemnity insurance cover not fully conforming to the above requirements shall be permitted by the Authority in special cases for reasons to be recorded by it in writing.(4)Limit of indemnity for any one claim and in the aggregate for the year in the case of insurance brokers shall be as follows:-Category of insurance Limit of indemnitybroker(a)Direct broker three times remuneration received at the end of every financial year subject to a minimum limit of rupees fifty lakhs(b)Reinsurance broker three times remuneration received at the end of every financial year subject to a minimum limit of rupees two crores and fifty lakhs(c)Composite broker three times remuneration received at the end of every financial year subject to a minimum limit of rupees five crores(5)The un-insured excess in respect of each claim shall not exceed five per cent. of the capital employed by the insurance broker in the business.(6)The insurance policy shall be obtained from any registered insurer in India who has agreed to-(a)provide the insurance broker with an annual certificate containing the name and address, including the license number of the insurance broker, the policy number, the limit of indemnity, the excess and the name of the insurer as evidence that the cover meets the requirements of the Authority;(b)send a duplicate certificate to the Authority at the time the certificate is issued to the insurance broker; and(c)inform the insurer immediately of any case of voidance, non-renewal or cancellation of cover mid-term.(7)Every insurance broker shall-(a)inform immediately the Authority should any cover be cancelled or voided or if any policy is not renewed;(b)inform immediately the insurer in writing of any claim made by or against it;(c)advise immediately the insurer of all circumstances or occurrences that may give rise to a claim under the policy; and(d)advise the Authority as soon as an insurer has notified that it intends to decline indemnity in respect of a claim under the policy.
