Web aggregators (websites that compile and provide information on policies of various insurance companies) are up for tighter regulatory norms.
In a draft regulation issued on Wednesday, the Insurance Regulatory and Development Authority (Irda) proposed each web aggregator be paid a flat fee not exceeding Rs 50,000 a year towards each product displayed in the comparison charts on its web site, compared with Rs 1 lakh earlier.
Existing players in the online insurance segment, however, are looking at applying to Irda for a licence. Yashish Dahiya, CEO of PolicyBazaar.com, said the company is studying the regulations and would be interested in obtaining a web aggregator licence.
“But, firstly, we would want to get more clarity on provisions like restriction on having multiple sites and non-insurance products. We are, however, looking forward to becoming a web aggregator licensed by Irda,” he added.
The draft has proposed that aggregators can neither have multiple sites to sell insurance, nor sell any other product other than insurance. These aggregators will have a three-year licence, which can be renewed.
Irda said in its draft that web aggregators interested in continuing in the business should apply to the regulator for renewal of their licence 90 days before the expiry of the previous licence. The net worth required for setting up a business as on the date of application is Rs 10 lakh and the aggregator also needs to continue to maintain the minimum net worth prescribed during the licence period.
A web aggregator is a company registered under the Companies Act and approved by Irda, which maintains or owns a website and provides information on insurance products of different insurers. At present, seven entities in India are licensed by Irda to engage in web aggregator business.
Manoj Aswani, head (business development) at MyInsuranceclub.com, said: “Prima facie, the draft looks in our favour, and the proposal to allow telemarketing services by web aggregators is on the positive side.” MyInsuranceclub.com is an Irda-approved web aggregator.
In the draft, Irda said that to be eligible, the web aggregator should be formed and registered under the Companies Act and be compliant with the prevailing foreign direct investment norms for insurance sector.
Further, the web aggregator should not be engaged in any other business other than the main objects of the applicant and shall employ or designate a director as principal officer to manage the company on a full-time basis. The regulator also said that every web aggregator should have a professional indemnity insurance cover throughout the license period.
Irda also proposed that the web aggregators should not display on their websites any information on products or services of other financial institutions or any other company. It has also proposed that these aggregators shall not display ratings, rankings, endorsements or bestsellers of insurance products on their websites.
For customer convenience, Irda said product categories should be clearly mentioned and products under one category can be compared. While the earlier regulations said Rs 10 will be paid to them for each lead by the insurer, the new draft said no charges will be payable for leads by the Insurer.
In an attempt to dissuade unlicensed players in the market, Irda said, that insurers shall not pay any fee or remuneration, by whatever name called, to any entity that owns a website not approved by Irda. The regulator has also proposed a limit of Rs 50,000 annual premium for non-single premium policies solicited over telephonic mode by telemarketers of web aggregators. Unit-linked plans cannot be solicited or sold over distance marketing mode, it added.
Irda asked all stakeholders to give their comments to it within 15 days, after which this regulation will be finalised.