IRDA Dons Dictator’s Hat–Regulates Online Insurance Aggregators

In a big blow to insurance comparison services, IRDA has issued new guidelines donning the hat of UI designer, a product manager to pretty much all the possible roles IRDA could think of.

Highlights from the issued guidelines (application from Feb, 2012):

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 default/home page of the websites of the web aggregators shall clearly and prominently provide links to the product comparison charts and tables for each category of products covered by them. The visitor to the website should be given clear product options to choose from and once a particular option is chosen, a product comparison chart relevant to his choice shall be displayed. The product comparison chart shall have, interalia, columns to display a) the premium quoted by each insurer relevant to the age, health and other personal details of the client for the product category, policy/premium term, quantum of cover etc chosen b) the default underwriting requirements such as medical examination, diagnostics or other documents c) exclusions, limits or other conditions, if any c) key features of the product chosen.

Web aggregators shall disclose prominently on the home page that the client/visitor’s particulars could be shared with insurers/insurance brokers.

– Web aggregators shall not carry any advertisements or sponsored content on their websites.

– Product comparisons that are displayed shall be upto date and reflect a true picture of the products.

– Remuneration shall be payable to web aggregators by insurers in compliance with the following provisions:

  • A flat fee not exceeding rupees one lakh per year towards each product displayed by the web aggregator in the comparison charts of its web site.
  • An amount not exceeding rupees ten towards each lead transmitted by the web aggregator.

– Web aggregator shall not transmit the data of a client to Insurer(s) other than the one(s) preferred by the client. Provided that, if the client evinces interest in buying insurance but does not prefer any Insurer, web aggregator shall not transmit the lead to more than three Insurers in the same class of insurance business or one Insurance Broker.

Web aggregator shall transmit the data of clients to Insurer / Broker:

  • not later than five days of visit to the web site.
  • reasonably securing the information of clients from unauthorized access and misuse;
  • with a reasonable level of suitability, reliability and correctness, and;
  • in compliance with generally accepted I.T. security procedures – Link

In essence, insurance aggregators cannot carry any advertisements/sponsored content on the website and cannot charge more than Rs. 10 per lead – which is way too atrocious and dictatorial in nature.

Some of the key startups/investments in this space:

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