What are the Penalties for Selling Insurance without a License
- September 20, 2024
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What are the Penalties for Selling Insurance without a License
Before you can sell an insurance policy, you need to obtain IRDAI license. This license is an authorization given by the Insurance Regulatory and Development Authority of India, allowing insurance companies to sell insurance policies in India. Selling insurance without being in possession of IRDAI license is considered an insurance fraud and is therefore, a punishable offense. Let’s find out what are the penalties for selling insurance without a license in this blog post!
Selling Insurance without IRDAI License is an Insurance Fraud
Insurance fraud happens when an individual or company sells insurance policies without having the authorization of the insurance regulator IRDAI. All the insurance companies, insurance brokers, insurance agents, etc. are required to obtain an IRDAI license before they can sell any insurance policies in India.
It is a legal requirement and not being able to fulfill this requirement is a punishable offense. It can lead to heavy fines and in certain cases, it can even lead to imprisonment.
Even if you had IRDAI authorization to sell insurance policies in the past, if it’s not renewed, you still cannot sell insurance policies. It’ll be considered an insurance fraud as well. So, it’s better to get IRDAI license renewal to prevent yourself from committing insurance fraud.
Legal Consequences for Carrying Insurance Business without IRDAI License
According to Section 3 of the Insurance Act, 1938, no person shall carry on any class of insurance business in India and no insurer carrying on any class of insurance business in India shall continue to carry on any such business, unless he has obtained from the IRDAI a certificate of registration for the particular class of insurance business.
Section (3) of the Insurance Act
If a person carries on the business of insurance without obtaining a certificate of registration under Section 3, he shall be liable to a penalty not exceeding rupees twenty-five crores and with imprisonment which may extend to ten years.
Section 42(7) of the Insurance Act
According to Section 42(7) of the Insurance Act, 1938, any person who acts as an insurance agent without holding IRDAI license to act as such shall be punishable with fine which may extend to five hundred rupees, and any insurer or any person acting on behalf of an insurer, who appoints as an insurance agent any person not licensed to act as such or transacts any insurance business in India through any such person, shall be punishable with fine which may extend to one thousand rupees.
Conclusion
Selling an insurance policy without obtaining IRDAI license is like prescribing medicines without the required medical license. It is considered an illegal business. Committing insurance fraud can land you in serious trouble, and it isn’t worth it. If you want to sell policies in India related to health, vehicle, home insurance, etc., it’s better to do it the right and legal way!
If you want to sell insurance policies in India, then you must obtain an IRDAI license. To receive this license from the insurance regulator IRDAI in a smooth and stress-free manner, get in touch with Registrationwala IRDAI consultants. We would be glad to assist you!
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