Compliances for Insurance Web Aggregator in India

Ashish M. Shaji

27 Jul, 2021

The provisions of Companies Act and Insurance Act govern the concept of Insurance Web Aggregator in India. Further, a company must obtain an Insurance Web Aggregator License from the Insurance Department (IRDAI) in order to be able to operate as an Insurance Web Aggregator. There are various other compliances for them, scroll down to know more.

Who are Insurance Web Aggregators?

Insurance Web Aggregators collect, compile and extend information regarding various insurance policies of different companies on a website. They act as an intermediary between insurance company and people who seek insurance policies.

They are a business entity that maintains a website providing information on various insurance policies provided by different insurance companies. They are primarily regulated by the IRDAI^[1] (Insurance Web Aggregators) Regulations 2017.

Moreover, they collect data on different policies of insurance companies and upload the same on a single online portal. People desiring an insurance policy may visit this portal and compare the products, prices and other details offered by insurance companies and then make a choice.

Capital requirements for Insurance Web Aggregator in India

The capital requirements to be fulfilled are as follows:

• The applicant should have minimum paid-up capital of 25 lakh rupees;
• If they are a company registered under Companies Act 2013, the capital should be issued and subscribed in the form of equity shares. If it’s an LLP, the partners’ contribution to the LLP should be in cash only.
• The shares of applicant held as capital must not be pledged in any way for securing credit or other facility and at all times be unencumbered.

Net worth Requirements

The following net worth requirements should be met by the applicant:

• The applicants’ net worth should not go down 100% of the minimum capital requirements;
• The applicant must review the net worth half-yearly status on September 30^th and March 31^st every year. The applicant must report any non-compliance to IRDAI within 15 days. Then the applicant should restore the requirements in 30 days and confirm the same to the IRDAI;
• In case the applicant is unable to maintain the net worth even after 30 days, the Insurance Aggregation business must be stopped;
• The applicant is required to submit the net worth certificate certified by a CA to the IRDAI every year after finalizing books of accounts.

Compliances to be followed by Insurance Web Aggregator in India for grant of the certificate of registration

The applicant should adhere to the following conditions:

• The applicant should comply with the code of conduct and conditions prescribed by the IRDAI from time to time;
• The applicant can only solicit insurance and procure many insurance policies commensurate with the resources;
• The applicant must comply with provisions of the IRDAI Act 1999 and the regulations and guidelines issued thereunder;
• The applicant should intimate IRDAI of any material change or misleading or false information in the previously submitted documents;
• The Insurance web Aggregator shall maintain records in the specified format, which will capture policy-wise details and shall put in place systems that permit regular access to such records by the authority.

 Dos’ and Don’ts’ for Insurance Web Aggregator in India

The Web Aggregator shall-

• Display information related to insurers who have signed the agreement with the web aggregators;
• Carry out and perform activities for the purpose of lead generation for insurers;
• Ensure that the information systems including the aggregation website/portals, lead management system and data centres hosting website/portals/lead management system complies with the generally accepted information security standards and procedures in force in India;
• Ensure that the leads and other data is sent to the insurers and others through secured layer data encryption technologies;
• Use only RBI licensed payment gateways for collection and transfer of premium to insurers when the web aggregator is authorized by the insurer to collect premium on behalf of the insurer;
• Ensure that the information systems, including the aggregation website/portals, lead management system and data centres hosting website/portals/lead management system, are audited by the CERT.

The Web Aggregator shall not-

• Display any information related to products or services of other financial institutions/FMCG on the website;
• Display advertising of any sort, either related to any product or service including insurance product or service, other financial products or service in the website of the web aggregator;
• Operate multiple websites or tie-up with any other approved or unapproved, unlicensed entities/websites for lead generation etc. subject to few exceptions;
• Operate the websites of other financial or commercial entities or use other social media sites etc. for comparison of products;
• Function in any other manner for the purpose of transmitting leads to any entity that is engaged in the insurance business.

Conclusion

Information compiled and collected by the Insurance Web Aggregator is uploaded on the online portal to ensure that the consumers who are looking for insurance could easily access it. Further, all pre and post compliances must be strictly followed by all Insurance web Aggregator in India.

Read our article:What are the Major Differences between General Insurance Brokers and Web Aggregators?