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Insurance IRDAI allows insurers to pay commission to web aggregators on policy sales

IRDAI allows insurers to pay commission to web aggregators on policy sales

The insurance regulator included web aggregator under the purview of insurance intermediaries
Team Cafemutual May 4, 2017

Now web aggregators such as policybazaar.com will get commission from insurance companies if a visitor buys a policy through their website.

IRDAI issued a circular in which it included web aggregators under the purview of insurance intermediaries. This means, IRDAI allowed insurance commission to remunerate web aggregators at par with other insurance intermediaries.

Currently, insurance intermediaries get 40% of the annual premium as the first year commission in term plans. Similarly, trail commission or commission on renewal of policies stands at 10% of annual premium under term insurance policies.

While the first year commission in traditional policies, with over 12 years of premium payment term, is 35% of annual premium, insurers can pay up to 15-33% of annual premium on policies having premium paying term of less than 12 years depending on the tenure. The insurance regulator fixed the trail commission at 7.5% throughout the premium paying term.

IRDAI kept commission on most non-life policies, like health and motor insurance, at 15% of the annual premium.

Web aggregators compile and provide information on insurance policies of various companies on a website. IRDAI has mandated web aggregators to provide unbiased information of insurance products on different types of policies—like whole life insurance, term plan, health insurance, endowment, annuity—on their portals.

The circular stated, “No charges shall be paid for transmission of leads by the insurance web aggregator to the insurer. Leads, which are converted into sale of insurance policies, will entitle the insurance web aggregator to earn remuneration as applicable to insurance intermediaries.”

Currently, web aggregators charge an annual fee of Rs50,000 per product for displaying its feature on their websites. They also charge for services at fixed rates for any other outsourcing work, like collection of premiums from customers. They have been charging a maximum of 30% of first year premium as lead generation fee. However, a web aggregator cannot charge lead generation fee from now on.

Insurance companies can make additional payouts to web aggregators for various services such as telemarketing and advertisement.  “The insurer may pay the insurance web aggregators, reasonable service charges at mutually agreed rates fixed in the service agreements with the insurance web aggregators.” 

As on January 2017, there are 21 web aggregators in India.

3 Comments
MOHAN DUTT SHARMA · 3 weeks ago
It's a news that renewal commission is 10% on Term Policies. Insurance companies are paying 2% on renewal premiums.

There are cases when we sell Term Plan but customer prefers to buy online plan of that Insurance company since it is more cheaper. In such cases Insurance companies should also give some incentive to their Advisors.
Prashant · 3 weeks ago
Do you mean that they were not getting commissions on the policies sold by them till now? This is absurd since web aggregators are getting commissions on the policies sold by them from the beginning. Is this a news or an eyewash? We get 10% commission upfront on the policies sold by us(agents) and 5% renewal commissions. Web aggregators get a lot more commissions even after such a huge difference in premiums. This means that IRDA only wants insurance companies and brokers and banks and web aggregators to earn money at the cost of customers and agents. Who knows whether to remove agents insurance companies can start a web aggregating firms themselves or may be they would be having them as well. One should never buy a policy from anyone except an agent. Rest all are a misselling hubs.
Prashant · 3 weeks ago
30% of first year premium is much higher than the commissions we get as agents. Plus all the charges and fees. I wish our company gives us all these charges and fees. We are only allowed to sell one company's products whereas web aggregators sell all the companies policies which agents can not sell more than one company's policies still they get so much commissions in the form of charges and fees which is completely unjust. IRDA needs to work for the benefit of people of this country instead of benefitting insurance companies, banks, brokers and web aggregators.
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