The Insurance Regulatory and Development Authority (IRDA) have issued strict guidelines for websites giving information on insurance products of various companies and enabling comparison before buying.
The "web aggregators" earn a commission from the insurance company they have tied up with for every product that is sold through these websites. Till now, there have been no guidelines on the amount of commission payable or the pre-requisites to enter into an insurance web aggregation business. The new guidelines will help standardize norms.
As per IRDA's draft guidelines, companies will now have to register themselves with IRDA and also have a minimum net worth of Rs 10 lakhs to become eligible for providing information on their websites related to the insurance sector.
Starting February 2012, web aggregators would not be allowed any sponsored content on their website. They will not be allowed to use any rating, ranking, endorsement or bestsellers of insurance products. There would be cap of Rs 1 lakh on the fee paid by the insurance companies to the web aggregators. To plug the gap of paying fee via other means such as training, infrastructure development, IRDA has disallowed "reimbursement of expenses" by insurers.
They will get remunerations only if leads provided by them result in a sale, which is capped at 25% of the total commission payable on the 1st year premium. The current industry average per lead is around Rs 100. From February, it would come down to Rs 10.