Web Aggregators- Transforming the insurance sector

Those of us who were adults in the pre-internet times would remember the hassles that one had to go through to purchase an insurance policy which was ideal for them and their loved ones. The hiring of a local insurance agent, his constant visits to the house, the fear of being duped due to a lack of adequate information, all of this could take a toll on one's stress levels.

I mean, with the busy metropolitan lifestyle, who really had the time or the energy to spend on something so extensive and time-taking? Eventually, this would lead to the inevitable. People would finally decide they did not need insurance for something with as unlikely a probability as an accident, or sudden death.

They would get busy, or simply lazy, and keep procrastinating until it was too late. Today, however, things have changed for the better with the boom of the Information Technology sector. Just as everything else has become as quick as the click of a mouse, so has purchasing an insurance policy. Instead of having to hire local insurance agents or go to insurance offices, one can simply access the website of a recognised insurance web aggregator to find out all the necessary related information required by him.

Comparisons of various insurance policies offered by insurance giants in the market have become extremely simple, with all the competing features, costs and coverage displayed on a single screen.

What are Web Aggregators?

As per the definition of the Insurance Regulatory and Development Authority of India (IRDAI), Insurance Web Aggregators compile and provide information about insurance policies of various companies on a website. In other words, they collect data from various sources and databases, such as insurance company websites, and compile this data to make it presentable to any potential insurance policy buyers.

Role and Duties of Web Aggregators

Since these web aggregators have gained prominence in India, the Insurance Regulatory and Development Authority has brought about a set of regulations for these aggregators, compiled as the Insurance Regulatory and Development Authority (Web Aggregators) Regulations, 2013

(https://www.policyholder.gov.in/uploads/CEDocuments/IRDA%20Web%20Aggregrators%20Regulatons%202013.pdf)

which define the role and duties of such aggregators. This set of regulations define the process of attaining a license to act as a web aggregator, disclosure norms, penalties for aggregators without a license, remuneration of web aggregators and other related matters.

While the role of web aggregators requires them to facilitate comparison of various insurance policies by entering into agreements with insurers, it does not include endorsing any particular insurer or advertising a particular insurance policy. The primary motive should be merely to provide the required justified information to the potential buyer.

While performing its duties, an insurance web aggregator has to ensure that no inconvenience is caused to the customer. It can act as an insurance broker or solicitor, contacting the potential buyer directly. It may also provide the buyer's contact details to various relevant insurance companies, provided the buyer is made aware of the fact that their contact details are going to be shared with any such insurance company.

As per the final regulations of IRDA which have been finalised on 10th January, 2016, the insurance web aggregator can be remunerated by charging a fee of Rs. 50,000 from the insurer for each insurance policy or product of this insurer that it displays on its web page. Apart from this fee, it may also charge premium or commission of sorts, of not more than 30%, for any conversions into a sale and may also charge a pre-decided fee for certain other activities such as premium collection carried out by it.

The Insurer's Reaction

Insurance is a large growing market. Various estimates say that there would be 450 million internet users by 2020. The insurance industry has increased multiple-fold post the introduction of insurance web aggregators in the market.

They have become extremely receptive to these aggregators and are rushing to enter into agreements and tie-ups with them. They understand the reach of the internet and have played wisely by embracing the power of the online aggregators, especially after the regulations provided by the IRDA. The insurance web aggregators act as information providers, telemarketers, solicitors and brokers.

They have made life so much more convenient for busy buyers today and have helped raise the insurance industry of the country to an all-new high.The scope for them is enormous today since the online market is one so vast that leaving it untapped would be a grave blunder on the part of the insurance companies.

Written by  Naval Goel, Founder and CEO, PolicyX.com