Irda bans comparos on aggregator websites

The Insurance Regulatory and Development Authority (Irda) on Monday banned product comparisons put up by insurance aggregators on their portals.

“Web aggregators shall not display ratings, rankings, endorsements or bestsellers of insurance products on their website. The content of the websites of the web aggregators shall be unbiased and factual in nature; they shall desist from commenting on insurers or their products in their editorials or at any other location in their websites,” the regulator said in a circular.

Web aggregators offer information on various insurance products and price comparison of products of different insurers.

The Irda circular also proposes several other stringent guidelines for web aggregators, including restrictions on all kinds of advertisements and sponsored content.

It also hits them where it hurts the most — the pocket.
Until now, web aggregators earned Rs80-90 per lead from the insurer or broker, irrespective of whether it led to an actual sale. This has been reduced to Rs10 per lead by Irda.

Lead refers to information pertaining to a client who has accessed the website and has submitted contact information and shown interest in buying it through the particular web portal.

Also, where a lead did convert into actual sale, the aggregator used to get the entire prescribed commission on the product. Now, however, they will take home barely 25% of the prescribed commission.

Say the prescribed commission on a product, such as a term insurance plan, is 4% of the first year premium.

The new rules mean the aggregator will take home only a quarter of the 4% commission amount, instead of the entire 4% earlier.

Alternatively, the insurance company or broker can pay the aggregator a flat fee not exceeding Rs1 lakh per year towards each product displayed by it in the comparison charts of its website.
What’s more, while it was not mandatory earlier for a web portal to register with the regulator, the new guidelines emphasise the need for registration with a fee of Rs10,000 for three years.

“The guidelines will result in the end of insurance aggregation in India. Under this condition, it does not make any sense for us to function as aggregators in the market anymore,” said Yashish Dahiya, CEO , Policy Bazaar.com.

Harsh Roongta, CEO of Apnapaisa.com, couldn’t agree more. “We are not happy with this move. With this, the customers will also find difficulty in opting for the right product of the right company. This will also be more time consuming as the web aggregators will not be allowed to give a comparative illustration.”

Amarnath Ananthanarayanan, managing director and CEO, Bharti AXA General Insurance cited another blow from the guidelines.

“The current regulation clearly states that the web aggregators will be able to pass on leads to the insurers or brokers. But the customer cannot be closing the policy sale on the web aggregator’s site. Given the Trai (telecom regulator) guidelines on ‘do not call’ list, this will hinder the insurer or broker from being able to sell the policy and the customer from getting the policy of their choice,” he said.

Irda had come up with an exposure draft in April this year in a bid to tighten regulation on web aggregators. The current guidelines are in line with those discussion papers.

Some feel the move augurs well for the market.

“This regulatory action, which aims to ensure that the web aggregators refrain from displaying any biased information is a step in the right direction. But since they will now earn less from a lead, the aggregator business may not be as lucrative as before,” said GV Nageswara Rao, managing director and CEO, IDBI Federal Life Insurance.