Online Insurance: Cleaning the web

: With a spate of insurance companies launching online products to reduce cost and insurance web aggregators (IWAs) offering information to customers, the Insurance Regulatory and Development Authority (Irda), has come come out with new draft guidelines to regulate the aggregators.

The new guidelines are aimed to bring in uniformity in display of prices and key features of the insurance products by the websites, to protect the interests of the customers and also to rationalise the approach adopted by insurers and brokers in dealing with various websites that offer price comparisons and display the key features of products.

IWAs like click2insure.com, insurancemall.in and policybazaar.com compile information on the various features and pricing of the products. A customer can compare the premiums and policy features to get the best deal. However, the urgency to bring in regulations for IWAs comes from the fact that many websites were not giving latest and correct...information to users and are instead collecting personal information of potential customers and were sharing the data with the insurance companies. It is estimated that at present, the IWAs do a business of R150 crore every year.

The panel headed by A Giridhar, executive director, Irda, is also examining a wide range of issues such as a mechanism of electronic issue of policies, the legal implications, cost-benefit analysis and operational procedures, among others. It has invited comments from various stakeholders on the draft guidelines and will come out with the final version soon.

Deepak Sood, managing director and chief executive officer of Future Generali India Life Insurance, says online marketing is rapidly evolving new distribution channels that show greater promise as it will help insurers reach customers in a cost-effective manner. “Initially, at least, the online market market will be characterised by simple products. Complicated products which will need professional advice in...choosing various features and options of the product may not be suitable for online sale unless the customer is highly informed,” he says.

The insurance regulator has proposed that IWAs be registered under the Companies Act and must have a minimum net worth of R50 lakh at any time during the previous three consecutive years. It has also proposed that they should not have any referral arrangement with an insurer and most importantly, that they will not be an insurance agent, corporate agent, micro-insurance agent or an insurance broker. Further, they should only display information pertaining to insurance products and price comparisons of different insurers approved by Irda. The draft guidelines also underline that IWAs will have to ensure that if a customer evinces interest in buying an insurance product but does nor prefer any insurer, the IWA will not transmit the customer’s details to the insurer.

Insurance experts say...