IRDA to tighten rules for web aggregators

The IRDA draft has proposed that aggregators can neither have multiple sites to sell insurance, nor sell any other product other than insurance

July 26, 2013 10:18 IST | India Infoline News Service
The Insurance Regulatory and Development Authority (IRDA) proposed each web aggregator be paid a fee not exceeding Rs. 50,000 a year towards each product displayed in the comparison charts on its website, compared with Rs. 1 lakh earlier.

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.

Web aggregators interested in continuing in the business shall apply with the Authority for renewal of the license 90 days before expiry of the previous license, the IRDA said in the draft regulations on 24th July.

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.

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.

Irda asked all stakeholders to send their feedback within 15 days, after which this regulation will be finalised.

The regulation shall come into force on the date of their notification in the Official Gazette.

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