The Insurance Regulatory and Development Authority (Irda) has come out with a exposure draft for changes in the existing guidelines on web aggregators. Once these guidelines become final, aggregators will not be able to display ratings, ranking, endorsements or bestsellers on their websites and the content will have to be unbiased and factual in nature. Also, they will have to desist from commenting on insurers.
The exposure draft underlines that web aggregators should provide an option to select three insurers to whom the lead can be communicated. Also, they cannot transmit the data of a client to insurers other than the one preferred by him. The aggregators will have to disclose prominently that the visitors’ particulars could be shared with insurers.
The norms aim to bring in uniformity in display of prices and key features of the insurance products by the websites, to protect the interests of customers and also rationalise the approach adopted by insurers and brokers in dealing with various websites that offer price comparisons and display key features of products.
The first set of guidelines came into effect February 2012, but most of them were very restrictive. Yashish Dahiya, chief executive officer of Policybazaar.com, says the result was limited growth in the web aggregation channel. “Now, with a year passing since the licences were issued, it seemed to be a good time to review the scenario. The current draft is a clear indication that the Irda understands the value-addition of the segment and is taking relevant steps to revive it,” he says.
The new draft exposure says employees of web aggregator will have to complete 50 hours of theoretical and practical training on insurance from an institution recognised by Irda and clear an examination at the end of the training period.
All telecallers deployed by web aggregators will have to be on their rolls and should have undergone statutory training as prescribed by Irda.
Insurers will pay aggregators a flat fee of not more than R50,000 a year for each product displayed and the aggregators will have to display the names of insurers with whom it has an agreement to refer leads.
They will maintain an effective lead management system — a software used for recording, filtering, validating, etc — and ensure that they are recorded and monitored through the system. Aggregators will also have to put in place a system for recording and monitoring complaints and accept complaints either by phone or in writing, and acknowledge them promptly.
The draft guidelines say that if the client evinces interest in buying insurance but does not prefer a particular insurer, web aggregators shall not transmit the lead to more than three insurers in the same insurance business.
So, in such a case, how will the aggregator pick up the three insurers where the lead can be communicated? Analysts say since no selection criteria is proposed in the draft regulations, the web aggregator is free to send the lead to any three insurers of his choice and this will depend on his business or working relations with the insurer.
Web aggregators compile information on various features and pricing of products, where a customer can compare the premiums and policy features to get the best deal. Also, online leads result in cost reduction for both the manufacturer and customers as 60% of India's population is below 30 years of age and is tech-savvy.
Dahiya of Policybazaar.com says, in the current scenario, most distribution channels in insurance push a product based on commission. On the other hand, a web aggregator is a pull channel where the consumer has himself logged on to buy a product. “So, to reduce cost, the focus needs to be on creating a good product that can sell on its own. If all energies are invested in developing better products, both the insurer and the aggregator can easily work together to bring down the cost of acquisition,” he says.
He adds that besides the obvious reduction in premium because of removal of commissions, comparison is a great advantage with web aggregators. “Buyers can compare and make an informed decision to buy the best policy from various insurance companies keeping in mind their financial goals. Decreased paperwork, speed in transaction, standardised service and a pre-determined turnaround time are also additional intangible benefits a customer can avail,” he says.
Analysts say online marketing is rapidly evolving as a new distribution channel. Initially, it will be characterised by simple products as complicated ones will require professional advice on various features and options, which may not be suitable for online sale unless the customer is highly informed.