Moneycontrol
Last Updated : Jul 25, 2013 10:32 PM IST | Source: CNBC-TV18

Irda reaches out to cyberspace to clamp misselling

Insurance regulator Irda‘s continuing campaign to curb misselling of insurance products has caught web aggregators in its cross-hairs. The regulator has proposed stricter rules that these websites which compile and provide information on policies of various insurance companies must adhere to, reports CNBC-TV18‘s Manasvi Ghelani.


Insurance regulator Irda’s continuing campaign to curb misselling of insurance products has caught web aggregators in its cross-hairs. The regulator has proposed stricter rules that these websites which compile and provide information on policies of various insurance companies must adhere to, reports CNBC-TV18’s Manasvi Ghelani.


Also read: Insurance companies rejoice on hike in FDI cap


Websites like policybazaar.com, myinsuranceclub.com, and e-mudrainsurance.com will soon have to adhere to a set of strict guidelines if they want to continue selling insurance products. 


The insurance regulator has proposed modifying the rules governing these web aggregators, and asked stakeholders to provide feedback on the proposed changes within 15 days.


These are changes that will deepen the Indian insurance space, and bring it on par with global practices. The insurance density in India is still very low as compared to the global average. in case of life insurance.


The insurance density stands at USD 49 as compared to global average of USD 378. Whereas, in general insurance, the insurance density is USD 10 as compared to the global average of USD 283.


So, we see a huge gap here. What we have observed in developed markets is that web aggregators are playing a greater role in removing such barriers.


Ashish Kumar Sahay, CEO, buysmartpolicy.com says, “The insurance density in India is still very low as compared to the global average. In case of life insurance, the insurance density is at USD 49 as compared to global average of USD 378, whereas in general insurance, the insurance density is USD 10 as compared to the global average of USD 283. So we see a huge gap here. What we have observed in developed markets is that web aggregators are playing a greater role in removing such barriers.”


Some of Irda’s news norms for web aggregators are that aggregators should have a professional indemnity insurance cover throughout the license period and should have professional indemnity insurance cover. Also, insurance companies should pay only a flat fee not exceeding Rs 50,000 a year towards each product displayed on the website.


Web aggregators say these rules will not only provide better investor protection, but also make the business more lucrative.


Ashish Kumar Sahay, CEO , buysmartpolicy.com says, “ Irda has allowed outsourcing in areas such as premium collection and policy services. This is a new development and gives us as web aggregators a lot more flexibility in our operations. Initially, there was a cap on the commission which was 25 percent of the first year premium payable. This has now been removed. This again will help us increase our toplines further.”

But there are some tough clauses that have these websites cringing. A case in point is this - the guidelines say web aggregators will have to employ a full-time principal officer to manage the company which means an increase in operational costs. But companies hope more clarity will come in the next 15 days.

First Published on Jul 25, 2013 10:32 pm
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