Web aggregators are exploring new business model that will be viable in the light of the new guidelines that come into effect from next month.
Insurance web aggregators have only a month to adapt the new IRDA guidelines and are grappling with development of a viable business model.
“Compared to the remuneration offered to web aggregators across the globe, we feel that this revision is harsh. It will result in exiting from this business by many,” said Harsh Roongta, CEO, Apnapaisa.com.
Another player spoke on ground of anonymity, “This move will force the industry to switch to a cost-per-sale model from the cost-per-lead model. We are going through a tough time and have still not reached a consensus on the changes to be made in our business model.”
As per the new guidelines:
· Companies must have networth of atleast Rs. 10 lakh and register themselves with IRDA.
· No sponsored content should be displayed by web aggregators on their websites.
· Web aggregators cannot display any rating, ranking, endorsement or bestsellers of insurance products.
· There will be cap at Rs. 1 lakh on the fee paid by insurance company to the web aggregators.
The IRDA has also disallowed reimbursement of expenses like infrastructure development and training by insurance companies, in order to plug the gap of fee to be paid. Web aggregators will be remunerated only if the lead provided by them results in a sale. This too will be also capped at 25% of the total commission payable on the first-year premium. At present, the industry’s average per lead is at Rs. 100 which, by February, will come down to Rs.10.
Some important clauses in the drafts
Lead limitation: If the client evinces interest in buying insurance but does not select an insurer, then the lead may be transmitted to not more than five insurers in the same class of insurance business or to more than one Broker. The same lead cannot be shared with both. Web aggregator shall transmit the client data to insurer/broker within five days of the client’s visit to the web site.
Payment terms: No advance payments will be made to the companies. Payments shall be made to web aggregators only towards such leads that result in the sale of a policy. The fee for the lead shall not exceed twenty-five percent of the commission payable on the first year premium
IRDA Approval: IRDA approved web aggregators can generate insurance related leads for insurance companies. IRDA shall grant approval for a period of three years to the web aggregator. The Authority may appoint one or more of its officers as an inspecting authority to undertake inspection of the premises of the web aggregator to ascertain and see how activities are carried on, and also to inspect the books of account, records.