Consequent upon promulgation of Insurance Laws (Amendment) Act, 2015, insurance web aggregators are included in the definition of intermediary and insurance intermediary. As a result of the amendments in the Act the existing Insurance Web Aggregator regulations would undergo a change. The draft contains, amongst the others, the following changes:
Objective and definitions
1) Stating the objective of the regulations
2) Definition of “Authorised Verifier” to solicit insurance on the lines of other insurance intermediaries.
3) Replacement of the word “license” with the words “certificate of registration” in line with Act requirements.
4) The draft regulations will supercede the existing IRDA (Web-Aggregator) Regulations, 2013
Grant of new certificate of registration
5) 2 more additional eligibility criteria on the lines of other insurance intermediaries a) in case the application for registration is rejected by the Authority or has withdrawn the application, the applicant may apply afresh after expiry of one financial year; b) in case the foreign promoter or foreign investor has exited for any reason during the preceding two financial years he shall be ineligible to apply. However the Authority may relax this requirement depending upon the circumstances of the issue.
6) Increase in paid-up capital requirements and net-worth from Rs 10 lakhs to Rs 25 lakhs.
7) The order rejecting the application shall be communicated to the applicant within 30 days of such rejection in writing stating the grounds of rejection.
8) The applicant can appeal to the Securities Appellate Authority against the order of the Authority as per the provisions of the Act.
FDI Limit, Indian Owned & Control, Transfer of shares, ceiling on Indian investors
9) Increase in foreign investment limit from 26% to 49%
10) Compliance to Indian owned and Indian control criteria.
11) Manner of calculating the equity capital held by foreign investor in the web aggregator defined and on lines with Indian insurance companies
12) Shares of web aggregator not to be pledged and to remain unencumbered
13) Prior approval of the Authority required:
1. where after the transfer the total paid up equity holding or contribution of the transferee in the shares of the web aggregator is likely to exceed 5% of their paid up capital or contribution
2. Where the nominal value of shares intended to be transferred by an individual, firm, group under the same management jointly or severally exceeds 1% of the paid-up capital or contribution.
14) Ceiling on Indian Investors:
a. Where there are one or more investors in web aggregator, no investor shall hold shares in a web aggregator company exceeding 10% of the paid up equity capital of such web aggregator
b. All investors as indicated at (a) above, jointly shall not hold more than 25% of the paid up equity share capital of the web aggregator.
c. While an investor in a web aggregator may be an investor in other web aggregators, he cannot be a promoter in more than one web aggregator
Renewal of certificate of registration
15) Separate chapter, application form for renewal of certificate of registration introduced.
16) Replacing annual fees with upfront collection of fees for 3 years of Rs 25,000 to address administrative difficulties.
17) The order rejecting the renewal application shall be communicated to the applicant within 30 days of such rejection in writing stating the grounds of rejection.
18) The applicant can appeal to the Securities Appellate Authority against the order of the Authority as per the provisions of the Act.
19) Web aggregator to have a Board approved policy on the manner of soliciting and servicing insurance products.
20) Requirements of PI policy elaborated.
21) Issues of conflict of Interest, arrangements with insurers for distribution of insurance products and change in name of the web aggregator stipulated.
22) Addition on disclosures to the Authority and maintenance of books of accounts in lines with those applicable to other insurance intermediaries proposed.
23) Action against a person acting as a web aggregator without a valid certificate of registration spelt out in line with other insurance intermediaries.
Rules Governing Insurance Web Aggregator
24) Duties, obligations and functions of Insurance Web Aggregators shifted to Schedules.
Display of product comparisons on the web-site
25) Extending ULIP products to be sold by Web Aggregators
26) Limit of premium per risk/ per life of products sold on the web aggregator being revised from Rs 50,000 to Rs 1.5 lakhs.
27) The display of the product shall not be price alone. The web aggregator should display the important features, terms, conditions, exclusions, benefits along-with showing the price comparison.
28) Certificate of compliance to be submitted by the Principal Officer to the Authority at the end of every financial year.
Sale of Insurance online
29) Sale of Insurance online by Insurance Web-Aggregators shall be as per IRDAI’s Insurance Network Platform Regulations.
Sale by tele-marketing and distance marketing
30) Tele-callers replaced by Authorised Verifiers to sell policies through tele-marketing channel.
31) Role of Authorised Verifier defined.
32) To be determined in line with the Commission, Remuneration Regulations. However Web Aggregator to be allowed to charge a flat fee of Rs 50,000 per product and undertake outsourcing activities on mutual basis.
Penal provisions and Disciplinary proceedings
33) Penalty for violation as specified in Section 102 of the Act being reiterated.
Voluntary Surrender of certificate of registration
34) Process and procedures for voluntary surrender of certificate in line with other insurance intermediaries proposed.
Repeal and Savings
35) Compliance to Indian owned and control requirements within a period of 6 months as per methodology aligned to insurance companies.
36) Compliance to paid-up equity capital and net-worth to be completed in one year.
Application for new certificate
37) Seeking PAN/ Adhaar No of promoters, investors, shareholders, PO and Key management no and additionally DIN No. of directors.
38) Reduced number of documents and requirements. Largely self-certification and undertaking in line with other insurance intermediaries.
You are requested to offer their comments/ suggestions on the proposed regulations for consideration of the same by the department. The comments/ suggestions in MS-WORD format should reach us by 20th June, 2016 in the format attached to the undersigned by e-mail at randip [at] irda [dot] gov [dot] in and to Mr. Sanjay Verma, Deputy Director by e-mail at sanjay [at] irda [dot] gov [dot] in and webagg [at] irda [dot] gov [dot] in
(Randip Singh Jagpal)
Sr. Joint Director