Insurance Web Aggregator

New Rules Give Insurance Web Aggregators a Boost

Insurance web aggregators gather, compile, and offer details about the insurance plans of various businesses on a website. They serve as a middleman between those looking to purchase insurance policies and the insurance providers (insurers). Data on numerous insurance company policies are gathered by insurance web aggregators, who then submit it to a single online platform. People interested in purchasing an insurance policy can go to this portal, evaluate the goods, costs, and terms and conditions provided by several insurance firms, and then choose the best option.

Insurance Web Aggregators Guidelines

The Insurance Regulatory and Development Authority of India (IRDAI) has published new guidelines for web aggregators that no insurance web aggregators are allowed to push or promote a specific product of a particular business through that business’ website or through direct marketing. Also, the prospect’s needs must be taken into account when selling the goods.

The Insurance Regulatory and Development Authority of India (Insurance Web aggregators) Rules, 2017, released by IRDAI, will replace the 2013 regulations. The IFSCA (Insurance Online Aggregator) Rules were suggested by the International Financial Services Centre Authority (IFSCA), founded in 2020, and went into effect on January 31, 2022. 

These rules establish a procedure for registering and using Insurance Web Aggregators by the International Financial Services Centre. As a result, it will fall under the jurisdiction of the International Financial Services Centres Authority, a governmental organisation responsible for creating and supervising financial products.

When soliciting and obtaining insurance business, the Insurance Web Aggregators must make sure that, if they have agreements with more than one insurer, they are required to give potential customers information about the range of coverage, the duration of the policy, the amount of the premium that must be paid, the terms of the premium, and any other details that the customer may need on all of their products.

What are Web Aggregators?

Through insurance aggregators with an internet presence, life insurance plans can also be accessed online. As they present the plans of many insurers, the websites of insurance aggregators serve as comparison portals. The Insurance Web Aggregator Laws’ primary goal is to regulate and keep an eye on Web Aggregator. This insurance intermediary runs a website that connects insurance prospects to information about various insurers’ policies, pricing comparisons, and other relevant topics.

According to the Guidelines, a web aggregator is a business that is registered under the Companies Act^[1], has Commission approval, owns a website, provides information about insurance products, compares the prices and features of various insurance products, and provides leads to insurers.

Activities and functions of Insurance Web Aggregators

Several of the crucial tasks and duties performed by Web Aggregators have been carefully described and organised by IRDAI. They include:

• Displaying product comparisons on websites and outlining their terms.
• Transmitting leads to insurers in a specific way by web aggregators.
• How insurance is sold online by web aggregators, selling insurance via telemarketing, and other forms of distance marketing for the purpose of soliciting insurance based on leads generated from its designated website. Even the payment of an Insurance Web Aggregator’s remuneration is subject to the rules established by IRDAI.

The solicitation of inexpensive Ulips is now permitted to be sold online on the web aggregator’s platform up to a limit of Rs. 1.5 lakh premium, Remuneration for renewal of insurance policies such as motor insurance, health insurance, and other similar policies has been permitted, and Remuneration through reward for efforts expended in selling zero commission products is now being provided on the websites.

License Requirement

The Guidelines, which took effect on February 1, 2022, forbid anybody from acting as a web aggregator without obtaining a licence from the Commission. Nonetheless, a grace period of 60 days from the Guideline’s effective date was given to allow any unlicensed web aggregator to obtain the operating licence; otherwise, the Commission may impose sanctions in accordance with the NAICOM Act and the Insurance Act 2003.

Eligibility requirements for an insurance web aggregators license

The following requirements must be met by applicants in order to receive the Insurance Online Aggregator Registration Certificate or License:

• The applicant must be a limited liability partnership (LLP) or a company registered under the Limited Liability Partnership Act of 2008 or the Companies Act of 2013. The LLP’s partners must, however, be Indian citizens.
• The company’s or LLP’s Memorandum of Association (MoA) should state that its primary objective is the web aggregation business of insurance products.
• The applicant should not be working for any other company besides one that aggregates insurance websites.
• According to the rules of the Insurance Regulatory and Development Authority of India, the applicant is not appointed or registered as an insurance/microinsurance agent, corporate agent, surveyor and loss assessor, Third Party Administrator (TPA), insurance marketing firm, or any other intermediately (IRDAI).
• There should be no referral agreement between the applicant and an insurer.
• The Principal Officer has completed training, passed the required examination, and possesses the credentials listed in Form C of the Regulations.
• The critical managerial staff, principal officer, promoter, director, partner, or shareholder has complied with the requirements of the fit and proper criteria set forth in Form D of the Regulations.
• The individual (Authorised Verifier) who works for an insurance web aggregator or a telemarketer to procure and solicit insurance through telemarketing and distance marketing mode has passed the tests required by IRDAI.
• The requirements and code of conduct listed in Forms V and W of the Regulations have not been broken by the applicant.
• The applicant should not have withdrawn the application for any reason during the prior fiscal year from the date of application, and the IRDAI should not have rejected the application for a license/registration certificate award.

Operational Guidelines

• An insurance web aggregators must constantly have and maintain professional indemnity insurance coverage with a minimum limit of 20,000,000 (Twenty Million) or 50% of its annual gross commission income, whichever is more extensive, over the course of its operations.
• The Guidelines include detailed guidelines for online aggregators’ code of conduct, including how they should deal with complaints and their relationship with customers. The Guidelines further detail requirements for web aggregators’ sample websites, the display of product comparisons on those websites, and the business obligations of web aggregators and insurers.
• As a result, the Guidelines impose some limitations on the activities of web aggregators, some of which include: the display of any information pertaining to products and services of other financial or other product or service in the website, the display of advertising of any kind, the operation of multiple websites or a partnership with other approved/unapproved/unlicensed entities/websites for lead generation, the operation of the website(s) of other financial or sale entity, or the use of it.
• The Guidelines also specify information technology infrastructure needs for running a web aggregator, such as internet and computer network standards, backup, recovery, and business continuity provisions, an IT security policy, privacy protections, and requirements for identification, access control, and security log.
• The Guidelines also include provisions pertaining to web aggregator employees, such as the need for the Commission’s approval prior to the appointment of a Principal Officer, the need for employees to meet the Commission’s standards for being fit and proper, the requirement that they complete the necessary number of hours of practical training in insurance and web aggregation, etc.
• The Guidelines further state that before reporting a disagreement to the Commission, the SLA’s arbitration provisions between a web aggregator and partner insurance must have been exhausted. Affected parties have the right to refer problems involving insurance transactions to the Commission for resolution. The Guidelines also require the web aggregator and the partner insurer to set up a suitable complaints resolution procedure to guarantee that clients’ grievances are adequately addressed.
• The Guidelines require the online aggregator to compile Annual Reports and submit them to the Commission in regard to each accounting year. These Annual Reports must comply with the International Financial Reporting Standard. Additionally, it requires the web aggregator to inform the Commission of certain material disclosures pertaining to the identity of the company’s officers and any changes to that information.

Compliance requirements

Before the deadlines of April 30 and October 31 of each year, the Insurance Online Aggregators must deliver half-yearly returns to the Authority in the forms defined by the Authority, insurer-wise business put separately in respect of life, general, and health insurance.

At the conclusion of each financial year, the Principal Officer of the Insurance Web Aggregator shall provide the Authority with a certificate attesting to the Insurance Web Aggregators’ compliance with all of the terms of these Regulations.

Conclusion

The Guidelines now fully control the insurance online aggregator industry, which was previously unregulated. Purchasing life insurance online requires research, much as purchasing insurance offline through an insurance agent or broker. Before starting the online transaction, it is preferable to chat with the web aggregator executive to avoid purchasing the incorrect item for your unique needs. The procedure will be far more seamless, educational, and free from surprises if you approach them after completing at least little research on your requirements. In light of the advancement of technology in providing insurance services, this is one of the urgently required regulations in insurance business operations.

Also Read:
Insurance Web Aggregator License Registration
Compliances for Insurance Web Aggregator in India
What are the Major Differences between General Insurance Brokers and Web Aggregators?