Overview of Insurance Web Aggregator License
In India, a web aggregator provides information on the various insurance products offered by insurance companies. Insurance web aggregators allow buyers to compare different insurance products along with their features and prices. However, these web aggregators need to obtain the Insurance Web Aggregator License before commencing any aggregation activity through their website.
The main reason behind the introduction of Insurance Web Aggregators in India was to educate people and make them aware about the various insurance products. Earlier, people used to consult insurance agents before buying any insurance policies, against which agents used to charge a high commission. Therefore, the IRDAI came up with the idea of introducing a transparent, digital and highly regulated platform to minimise the malpractices of charging unnecessary commissions by insurance agents. Insurance Web Aggregators also provide the facility of policy comparison so that customers can make more informed decisions for their insurance needs.
Concept of Insurance Web Aggregator
An insurance web aggregator collects, assembles and maintains the information of different insurance products offered by various insurance companies. All the information collected by the web aggregator is made available on its online portal for easy accessibility by the consumers seeking insurance services. Further, the functions of the Web Aggregator are administered by the regulations enforced by the IRDAI (Insurance Regulatory and Development Authority of India). The concept of Insurance Web Aggregator is also governed by the provisions of both the Insurance Act and the Companies Act.
In India, if a company wants to operate as an Insurance Web Aggregator, it first needs to obtain an Insurance Web Aggregator License from IRDAI.
Laws Relating to Insurance Web Aggregator License
In India, the legal provisions regulating the concept of Insurance Web Aggregator License are as follows:
- The Insurance Act, 1938;
- The Insurance Regulatory and Authority of India (Insurance Web Aggregator) Rule, 2017;
Mandatory Guidelines for Insurance Web Aggregators
The guidelines issued by the IRDA for the Insurance Web Aggregators are as follows:
- The Insurance Web Aggregators are not allowed to promote the services and products offered by any particular insurer;
- The Insurance Web Aggregators can sell products only on the basis of the Analysis Report;
- The Insurance Web Aggregator needs to display the pricing of each product;
- The Insurance Web Aggregator is prohibited from displaying ranking, ratings and highlight any products as best-selling products.
Role of Insurance Web Aggregators
In India, the role of Insurance Web Aggregators is as follows:
- To boost and expand the online market for insurance products;
- To improve and enhance the purchase experience of the customers;
- To assist the customers throughout the process of sale.
- To make the insurance sector more transparent and approachable.
Functions of the Insurance Web Aggregator
The key functions of Insurance Web Aggregators in India can be summarised as:
- Display details about various insurance products on their digital platforms;
- Provide a facility of comparison between different insurance products on their website;
- Provides such comparison in an unbiased manner;
- Transmit any leads received through the digital platform to the respective insurance company;
- Sell insurance products via Telemarketing services;
- Solicit insurance products based on the leads received from the website.
Conditions Relating to Insurance Web Aggregator License
In India, an applicant needs to fulfil the following conditions for obtaining Insurance Web Aggregator License:
- The applicant company must be registered as a company under the provisions of the Companies Act, 2013. The term company also includes a Limited liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008.
- A company needs to ensure that its MOA (Memorandum of Association) authorises the business to undertake the activity of web aggregation of insurance products.
- A company is not allowed to engage in any other business than the main object;
- The applicant company must not be appointed as:
- Insurance Agent;
- Company Agent;
- Micro-Insurance Agent;
- Surveyor and Loss Assessor;
- Insurance Marketing Firm; or
- Any other insurance intermediary.
- The applicant company must not have a referral connection with an insurer;
- The applicant company must have a dedicated platform to perform the activities of an insurance web aggregator;
- The Principal Officer appointed must possess the qualification and experience prescribed by the IRDAI;
- The Principal Officer appointed must have obtained the requisite training and passed the examination prescribed by the IRDAI;
- The director, principal officer, promoter, partner, shareholders, or KMP (key management personnel) must fulfil the fit and proper criteria;
- The Authorised Verifier must possess the requisite training and experience prescribed by the IRDAI;
- The Insurance Web Aggregator must not perform any activities prohibited under the IRDAI Regulations;
- The IRDAI must not have previously rejected the application of the company for insurance web aggregator license registration;
- The applicant company must not have withdrawn the application for obtaining insurance web aggregator license in the previous financial year;
Any company that wants to operate as an Insurance Web Aggregator must have a minimum paid-up capital of Rs 25 Lakhs. The company can raise this capital by issuing equity shares as per the provisions of the Companies Act, 2013.
However, in a Limited Liability Partnership, the contribution made by the partners must only be in cash.
Further, the aggregate shareholdings of the foreign investors in the Insurance Web Aggregator must not exceed the limit of 49% of paid-up equity capital.
Net Worth Requirements
- The net-worth of an Insurance Web Aggregator can never fall below 100% of the minimum capital requirements;
- The net-worth of an Insurance Web Aggregator must be reviewed in every half year, i.e., 31st March and 30th In case of non-compliance, a report for non-compliance must be filed within 15 days. After that, a web aggregator needs to implement restoration measure within thirty days;
- In case the web aggregator fails to maintain the net worth even after thirty days, it needs to cease all the business activities;
- A Practising CA issues a duly certified net worth certificate after the finalization of the books of account.
Documents Needed for Insurance Web Aggregate License Registration
The documents needed for the Insurance Web Aggregate License Registration are:
- A copy of the COR (Certificate of Registration);
- Copies of MOA (Memorandum of Association) and AOA (Articles of Association) in case of a company or
- A copy of the LLP Agreement certified by a practising Chartered Accountant;
- A copy of PAN Card;
- Resumes of the Designated Partners or Directors together with the copies of their experience and qualification certificates;
- Resume of the Principal Officer together with the copies of his/ her experience and qualification certificates;
- A duly certified declaration made by two directors or designated partners stating the competency of the directors, principal officer, shareholders, promoters, KMP (Key Managerial Personnel) or partners:
- The directors, shareholders, KMP and the Principal Officer, are major;
- They are not of unsound mind;
- They have not been held guilty in any case of Criminal Breach of Trust, Criminal Misappropriation, Cheating, Abetment to Commit or Forgery in the last five years;
- They have not been involved in any economic offences in the last five years;
- The directors of the company do not hold any position or employment in an insurance company;
- The net worth of the company is at least is more than INR 25 lakhs.
- The directors or principal officers of an applicant company are not registered as the following:
- Insurance Agents;
- Company Agents;
- Micro-Insurance Agents;
- Surveyors or Loss Assessors;
- Insurance Brokers; or
- Any other insurance intermediaries specified by the IRDAI regulations.
- Pictures of the proposed portal along with the proof that the company has obtained domain name registration;
- Address proof of the area from where such a website would be hosted. Such an area can be company’s registered office or any other office for operations;
- List of the individuals who will have the authority to regulate and post details on the portal about the insurance products, comparisons and guides;
- A copy of the certificate issued by a practising CA stating the shareholding pattern and net worth of the company;
- Copies of the audited accounts, balance sheets and annual report for the last three financial years;
- Business Plan of the company for the next three years;
- Details of infrastructure including IT infrastructure proposed by and available with the applicant;
- Human Resource Chart displaying the responsibilities and functions of each individual;
- Training and qualification certificates of the Principal Officer and authorised verifiers;
- Login Credentials for the verification of the aggregation website, digital or LMS by IRDAI Information Technology Department.
Procedure for Insurance Web Aggregator Registration
The steps involved in the process for Insurance Web Aggregator Registration are as follows:
- Filing of the Application with IRDAI: An applicant who wants to obtain an insurance web aggregator license needs to file an application with the IRDA in Form A of Schedule I of the IRDAI Regulations.
- Documents and Fees Required: The directors of the company must file the application along with the prescribed documents. They also need to pay a prescribed fee of Rs 10,000 plus applicable taxes. The fee must be paid in the form a DD (Demand Draft) to the IRDAI. If an application is filed without the application fee, it would not be processed further. Further, an application must also be supplemented with a detailed five-year business plan of the business. Furthermore, the business plan must lay down its plan-of-action and financial projections.
- Eligibility Criteria: The applicant must also ensure that the company meets all the eligibility criteria before filing the registration application for obtaining the insurance web aggregator license. If the applicant company wants to perform the functions of telemarketing and outsourcing, it must specify the same in the application for registration.
- Rejection of Application: The authority has the power to reject an application which does not comply with the conditions of the IRDAI. In case of any omission or failure, the authority will grant a period of thirty days to the applicant company to rectify all the mistakes before it rejects it.
- Additional Information: The Authority can also ask the applicant company to submit additional information or clarification concerning any details specified or documents submitted by it. Further, filing replies to the queries raised by IRDAI is a multi-stage process. A company may need to file multiple replies for one query. If the applicant fails to file a reply within thirty days from the date of communication, the authority can reject the said application, and the applicant company needs to file a fresh application.
- Grant of License: The Insurance Regulatory Development Authority in India will issue a certificate of registration to the applicant company if it is satisfied that all the information and documents submitted are true and correct. Moreover, it must also hold an opinion that the grant of such license is in the interest of insurance policyholders.
Validity Period of Insurance Web Aggregator License
The certificate of Insurance Web Aggregator License has a validity of three years from the date on which the license was issued by the IRDAI (Insurance Regulatory Development Authority of India). At least thirty days before the expiry of the period of three years, the web aggregator needs to get the license renewed by filing an application along with the fees of Rs 25000.
- Free Telephonic Consultation;
- Preparation of a Business Plan;
- Company Registration with the IRDAI;
- Advisory on Application of Operation;
- Advisory on Work Flow and SOP;
- End-to-End Follow Up with the IRDAI.
Frequently Asked Questions (FAQs)
The grounds on which the application for Insurance Web Aggregator License may be rejected are when the documents submitted are false or unauthentic; when the applicant company is unable to furnish the details or documents asked by the IRDAI (Insurance Regulatory Development Authority of India) within thirty days; when the application filed by the applicant does not comply with the regulations made by the IRDAI.
There are several advantages of Insurance Web Aggregators such as easy comparison between the insurance policies; contacts with each service providers without personal meet; every Insurance provider competes in a fair market; saves the customers’ time and energy spent in collecting information about different insurance policies.
The functions of an insurance web aggregator are to display the Insurance Products along with their prices; facilitation of feature and benefit comparison between two or more insurance products; assistance in the process of the sale and premium payment of insurance products.
According to the IRDAI (Insurance Web Aggregators) Regulations, 2017, the channels from which an insurance web aggregator can earn its revenue includes charging a fee of up to Rs 50000 from an insurance company per year for each product; charging a fix commission for any leads converted by them and transmitted to the insurance company for sales of the respective policy. Moreover, an Insurance Web Aggregator can also charge a fee for providing outsourcing activities undertaken by the company.
A Principal Officer is a person responsible for monitoring the overall functioning of an Insurance Web Aggregator. The principal offer can be a shareholder, promoter or director in the company.
Any person employed by the insurance web aggregator to solicit insurance policies is known as the Authorised Verifier. The person needs to undergo training and pass an examination as prescribed by the IRDAI.
To obtain a duplicate certificate, the insurance web aggregator needs to file an application in Form I together with the fee of Rs 1000 requesting the IRDAI to issue a duplicate certificate.
The Certificate of Compliance (COC) is a document submitted by the insurance web aggregator to IRDAI stating that it has conformed with all the mandatory rules, regulations and code of conduct throughout the year.
The activities of the web aggregator includes providing the prospects with a number of insurance policies to choose from according to their requirements. On the other hand, the duty of the Insurance Broker includes suggesting the best insurance product depending upon the financial and other aspects of the prospects.
Yes, the applicant shall get a working website ready while making the preparation for the website. It is also mandatory to submit the audit report of the website known as CISA Report certified by authorised professionals for this purpose.
The Certificate of registration is valid for a period of three years from the date of registration provided it is not cancelled or suspended by the authority on any grounds.
Yes, the COR can be surrendered provided the same has been approved by the authority based upon the merits of the cases and necessary documents and information is submitted for surrender of certificate of registration is as Form Y.
- Graduate/Post Graduate in Arts, Science, or Social Sciences or Commerce or Engineering or Law or Management or its equivalent from any institution/university recognized the State or Central Government;
- Associate/Fellow member of the Insurance Institute of India, Mumbai; or
- Any post graduate from the Institute of Insurance and Risk Management, Hyderabad; or
- Associate/Fellow member of the Institute of Chartered Accountants of India, New Delhi ; or
- Associate/ Fellow member of the Institute of Cost and Works Accountants of India, Kolkata; or
- Associate/ Fellow of the Institute of Company Secretaries of India, New Delhi; or
- Associate/ Fellow of the Institute of Actuaries of India; or
- Certified Associates from the Indian Institute of Bankers, Mumbai; or
- Any other qualification specified from time to time by the Authority under these Regulations.