IRDA tightens rules for web portals selling insurance products

The Insurance Regulatory and Development Authority (IRDA) has tightened rules for Web sites and portals vending insurance products.

At present, there are no standards that these sites (also known as Web aggregators) follow.

Web aggregators are dedicated sites or portals that offer information on insurance products, including premiums and key features across companies and enable comparison.

For every deal that materialises through them, they earn a commission (that varies) from the insurance company or broker they tie-up with.

The new guidelines will help standardise norms.

As per IRDA's draft guidelines, companies will now need to have a minimum net worth of Rs 10 lakh. They will have to register themselves with IRDA to become eligible for providing important information related to the insurance sector on their Web sites.

Key features

They will also be required to provide key features — listed by IRDA — of insurance products across all insurers and all insurance genres, apart from updating premium amounts regularly.

The regulator has also said that the Web sites cannot display ratings, rankings, endorsements or bestsellers of insurance products.

Also, they cannot comment on insurers or their products in their editorials or in any other location in their Web sites.

IRDA also seeks to standardise the commission Web aggregators charge from insurance companies and brokers.

They will get remunerations only if leads provided by them result in sale and that too is capped at 25 per cent of the total commission payable on the first-year premium. The regulator has said that if a client evinces interest in buying insurance but does not prefer any insurer, companies should not transmit the lead to more than three insurance companies or one insurance broker.

“This is a good move as otherwise visitors to these sites are pestered with many calls from insurance companies,” said an insurance broker.

Also, in a bid to bring in greater transparency and disclosures to protect the policyholder's interest, the regulator has mandated that Web aggregators should not carry advertisements or sponsored content and they should prominently display on the home page that visitor's particulars could be shared with insurers/insurance brokers and they should not have a referral arrangement with any insurer.

IRDA has said that the insurance companies can pay these Web portals only Rs 10 for a lead.

“It is a myopic view as the lead amount of Rs 10 is impractical for us to sustain. It will not be financially viable for us and will force us to look at other avenues. In a sense, it is a dead end for us,” said Mr Deepak Yohannan, CEO, MyInsuranceClub.com.

deepa.n@thehindu.co.in