New web aggregator rules gazetted by the IRDAI now allow all kinds of insurance products to be sold on the aggregators' portals, as well as make doing business on the platforms easier in several other respects.
Previously, unit linked insurance plans (Ulips) were not allowed to be shown on web aggregators. With this bar now removed, Ulips will get a boost online. “Traditional investment products are complex, making them unsuitable for online sale. But now we will be able to sell Ulips, and given that Ulips are becoming popular once again, this is a welcome move,” Mr Naval Goel, founder and CEO of PolicyX.com told Livemint.
The new rules also increase the ticket size of insurance policies marketed on web aggregators from INR50,000 (US$775) to INR150,000, giving a boost to bundled life insurance policies.
Furthermore, as life insurance policies of up to INR150,000 qualify for a tax deduction, all insurance policies sold through aggregators are covered by the concession. "So, all investment products up to the full tax limit will be available through web aggregators,” said Yashish Dahiya, CEO and co-founder of Policybazaar.com.
Apart from more scope to sell products, the regulations allow remuneration even on zero-commission policies, such as online term plans, through rewards. The rewards, however, are capped at 20% of first-year commission and are for intermediaries who primarily sell insurance.
In the non-life space—for products such as health insurance, motor insurance and home insurance—it has now been clarified that web aggregators are entitled to renewal commissions as well.
However, for life insurance policies, renewal commissions are still not allowed as they are long-term contracts. So, when they sell a life insurance policy, web aggregators are entitled to first-year commissions only.
In the interests of consumers, the new guidelines for the web aggregators state that no insurance web aggregators should promote or push a particular product of a particular company either through their websites or through distance marketing. Further, the product has to be sold based on the need analysis of the prospect.
Mr Goel said that web aggregators currently account for less than 1% of total insurance sales and the new rules will boost greater participation by web aggregators. Currently there are around 21 web aggregators in the country.
The objective of the Insurance Web Aggregator Regulations is to supervise and monitor the web aggregator as an insurance intermediary, which maintains a website for providing an interface to insurance prospects for price comparison and information about products of different insurers and other related matters.