Across India, adherence to regulatory compliances is compulsory for all entities. Following these guidelines ensures efficiency in operations without unnecessary obstacles. Similarly, insurance web aggregators must also diligently comply with certain Insurance Web Aggregator Compliances prescribed by the regulatory authority. The principal regulatory authority for Insurance Web Aggregators in India is the Insurance Regulatory and Development Authority, commonly known as IRDAI. In 2017, IRDAI formulated the Insurance Web Aggregators Regulations, setting forth the guidelines that all insurance web aggregator licence holders in the country must adhere to. Therefore, insurance web aggregators are under the governance of these regulations, as well as the Insurance Act of 1938 and the IRDA Act of 1999.
Understanding the Role of Insurance Web Aggregators
Insurance web aggregators are intermediary entities in the insurance industry that facilitate interactions with potential insurance customers. Their primary functions include comparing prices and presenting information about diverse insurance products offered by various insurers. These aggregators compile data on a range of insurance policies from different companies and consolidate it on a unified online platform. This platform allows individuals seeking insurance policies to visit the aggregator's website, compare product offerings, pricing details and other pertinent information. Armed with this knowledge, individuals can make informed decisions when selecting their desired insurance coverage.
The different roles of a Web Aggregator in the insurance industry are:
- Facilitating Agreements:
Web Aggregators facilitate agreements between insurers and themselves. They collaborate with insurance companies to offer their products through the aggregator's platform. Essential information about these insurance products must be provided.
- Displaying Insurance Products:
Web Aggregators are primarily responsible for displaying insurance products on their online portals or websites. They create a platform where consumers can view and compare various insurance offerings.
- Product Information:
They present comprehensive information about insurance products, including coverage details, terms, conditions and pricing, making it easier for consumers to make informed decisions.
- Product Comparison:
One of their key functions is to enable users to compare different insurance products from various insurers. This helps consumers assess which policy best suits their needs and budget.
- No Ranking or Endorsement:
Web Aggregators, despite their role in comparing products, do not rank or endorse specific insurance providers or products. They provideunbiased information for consumersto make their own choices.
- Solicitation of Policies:
Web Aggregators are allowed to solicit insurance policies. They facilitate the process of consumers purchasing insurance policies through their online platforms.
- Online Solicitation:
Solicitation of policies is carried out through the aggregator's online website. Consumers can access information directly and the purchase process can often be completed online, simplifying the insurance buying experience.
Hence, insurance Web Aggregators serve as intermediaries, connecting insurers with potential policyholders and providing a transparent platform for consumers to explore, compare and purchase insurance products.
Net-Worth Criteria to Be Followed by Insurance Web Aggregators
The net-worth criteria for candidates in the insurance aggregation business are essential to maintain financial stability and regulatory compliance. The key points regarding net-worth criteria to be followed are:
- Regular Review and Reporting
Candidates need to assess their overall net worth twice a year, precisely on March 31st and September 30th. In case of any deviation from the stipulated net-worth criteria, it is essential to promptly notify the Insurance Regulatory and Development Authority of India within a fifteen-day period.
Candidates must address any inadequacies in their net worth within thirty days and furnish confirmation of compliance to the IRDAI.
- Annual Net-Worth Certificate
Candidates must submit an annual Net-Worth Certificate, duly authorised by a Chartered Accountant to the IRDAI. This certificate verifies the candidate's financial standing after completing their books of accounts for the year.
- Minimum Net Worth
The candidate's net worth should consistently meet or surpass 100% of the minimum capital requirements established by the regulatory authority. This guarantees that the candidate possesses adequate financial resources to function effectively as an insurance aggregator.
- Consequences of Non-Compliance
If a candidate fails to maintain the required net worth even after the thirty-day period, they may be required to cease their insurance aggregation business.
Adherence to these net-worth criteria is vital to ensure financial stability, regulatory compliance and the continued operation of an insurance aggregation business in India. Candidates must maintain a strong financial foundation to provide reliable services to consumers and insurers.
List of Insurance Web Aggregator Compliances
In the Insurance industry, certain regulatory Insurance Web Aggregator compliances must be adhered to. These regulations include the following key aspects:
Board Approved Policy
Insurance Web Aggregator compliances include establishing a comprehensive policy that has received the formal approval of their governing board. This policy must delineate the approach taken by the Insurance Web Aggregator in soliciting insurance products. It should include various critical elements, including the strategy for establishing multiple tie-ups, the types of products that may be sold, the grievance redressal mechanism, reporting obligations and any other pertinent matters. Periodically, the Insurance Web Aggregator Board must review this policy, ensuring its relevance and effectiveness, with a minimum review frequency of once every three years.
Professional Indemnity Insurance Cover
Throughout the duration of their registration certificate's validity, Insurance Web Aggregator compliances require these entities to maintain a professional indemnity insurance cover. This coverage is specifically outlined in Form K (Professional Indemnity Insurance) of Schedule III of the Insurance Web Aggregators Regulations, 2017. The Insurance Regulatory and Development Authority of India may, in exceptional cases, grant newly registered Insurance Web Aggregators a grace period of up to six months from the date of registration certificate issuance to procure and furnish evidence of this insurance policy.
Maintenance of Books of Accounts and Records for Insurance Web Aggregators
Insurance Web Aggregator compliances include being bound by regulatory requirements to maintain records and accounts. These obligations include various aspects, including financial statements, documentation and electronic records, as outlined below:
1. Financial Statements
Balance Sheet and Profit and Loss Account: Insurance Web Aggregator compliances require preparing a balance sheet at the close of each accounting period and also with a profit and loss account for the same period.
Statement of Income and Expense: Also, they have to compile a statement of income and expense, along with statement of cash or fund flow.
Additional Statements: As mandated by the regulatory authority, Insurance Web Aggregators must provide any other statements related to their business operations.
2. Submission of Audited Financial Statements
Insurance Web Aggregator compliances require providing the Insurance Regulatory Authority with a copy of their audited financial statements, accompanied by the auditor's report, within 90 days from the conclusion of the accounting year. Additionally, any comments or observations made by auditors concerning business operations, account statements or associated affairs must be clarified and attached to these statements.
3. Rectification of Deficiencies
In the event of deficiencies identified in the auditor's report, Insurance Web Aggregators must take corrective measures within 90 days from the date of the auditor's report and promptly inform the Authority of these actions. This compliance measure is essential to ensure the integrity, accountability and quality of services provided by Insurance Web Aggregators in the insurance industry, as mandated by the regulatory authority in India.
4. Maintenance and Accessibility of Records
All books of account, statements and documents must be maintained at the Insurance Web Aggregator's head office and be accessible to Authority officers for inspection during working days.
Electronic records, books, documents, contract notes and related materials must be retained for a minimum of 10 years from the end of the relevant year. However, records associated with legal disputes awaiting resolution by the courts should be retained until the court reaches a decision.
5. Electronic Records
Insurance Web Aggregator compliances include maintaining electronic records in an organised manner, including:
Leads: Records of leads generated and transmitted.
Policies: Details of leads converted into policies.
Complaints: Records of complaints received and their resolutions.
Product Comparison: Information about products displayed on their website for comparison purposes.
Remuneration: Details of remuneration earned for products displayed, leads converted to policies and outsourcing activities.
KYC Records: Client KYC records as per relevant Authority guidelines and provisions of the Prevention of Money Laundering Act.
Proposal Forms: Copies of electronically signed proposal forms submitted to insurers.
Client Register: A register containing client details, policy information, premiums, issuance dates and fees received.
Complaint Register: A register with details of complaints received, including complainant names, complaint nature, policy details and actions taken.
Correspondence: Copies of correspondence exchanged with the Authority.
Other Records: Any additional records as required by the Authority from time to time.
Compliance with these rigorous record-keeping and reporting standards ensures transparency, accountability and regulatory adherence in the operations of Insurance Web Aggregators.
Disclosure-Related Compliance for Insurance Web Aggregators
Insurance Web Aggregators are subject to various disclosure-related requirements aimed at ensuring transparency and regulatory compliance. These obligations include several aspects, as detailed below:
1. Half-Yearly Returns to the Authority
Insurance Web Aggregators must provide half-yearly returns to the regulatory authority, detailing business placed with insurers separately for life insurance, general insurance and health insurance. These returns should adhere to the formats specified by the authority.
Submission deadlines are set for October 31st and April 30th of each year.
2. Compliance with Authority Directions
Upon reviewing the returns submitted, the regulatory authority may issue directions or advice to Insurance Web Aggregators and these must be diligently followed by the recipients.
3. Disclosure Requirements
Insurance Web Aggregators are obliged to disclose the following information to the regulatory authority:
Changes in Information: Any changes in information or particulars previously submitted that could impact the registration certificate granted to the aggregator.
Client Portfolio: The names of clients whose insurance portfolios are managed or have been managed by the aggregator.
Legal Proceedings: Any legal proceedings initiated against the aggregator by other regulatory or government bodies must be disclosed within a reasonable period, not exceeding 30 days from the commencement of such proceedings. Additionally, any actions or directions issued by other bodies should also be disclosed to the authority within the same time frame.
Material Changes: Notification of any material changes in the composition of the Insurance Web Aggregator within 30 days of such changes. Prior approval from the authority is necessary for specific changes, including:
- Principal Officer change.
- Changes in Director or Designated Partner.
- Company name change.
- Address change of registered office, corporate office or head office.
- Engagement of service providers or third-party vendors for core activities (e.g., Lead Management System, Webhosting).
- Change in the location of servers hosting comparison website.
Immediate Disclosures: Certain information requires immediate disclosure within three days of the action, including:
- Opening or closing of branch offices.
- Updates to the authorised verifier list for insurance business solicitation via Telemarketing or Distance marketing modes.
- Claims under the professional indemnity policy.
- Acquisition of property.
Changes During Application Processing: Any changes in the information provided during the application process, either after filing the application or during its processing, should be voluntarily disclosed to the authority.
Adherence to these disclosure-related requirements is essential for maintaining regulatory compliance and ensuring that the authority remains informed about the operations and changes within Insurance Web Aggregators.
Compliance Certification for Insurance Web Aggregators
As a component of their regulatory commitments, Insurance Web Aggregators must strictly follow a vital compliance requirement, entailing the submission of a compliance certificate to the regulatory authority. This certificate serves as an affirmation of the aggregator's adherence to the prescribed regulations and guidelines. The specifics of this obligation include timely submission, a thorough account of compliance with relevant regulations, confirmation of adherence and authentication by an authorised signatory. This practice promotes transparency, accountability and regulatory compliance within the domain of Insurance Web Aggregators.
The specifics of this requirement are as follows:
Compliance Certificate Submission
Principal Officer Responsibility: The Principal Officer of the Insurance Web Aggregator is entrusted with the responsibility of submitting a compliance certificate to the regulatory authority.
Annual Declaration: This certificate serves as an annual declaration confirming that the Insurance Web Aggregator has meticulously adhered to all the provisions outlined in the Insurance Web Aggregator Regulations throughout the financial year.
Submission Timing: The submission of this compliance certificate is typically required at the end of each financial year.
This compliance certification is an important element of the regulatory framework governing Insurance Web Aggregators, ensuring that these entities maintain strict adherence to the established regulations and standards set by the regulatory authority.
Additional Insurance Web Aggregator Compliances
In addition to the previously mentioned Insurance Web Aggregator Compliances, they must adhere to the following supplementary Insurance Web Aggregator Compliances to ensure the integrity, security and transparency of their operations:
1. Product Information Display
Insurance Web Aggregator compliances include displaying comprehensive information related to insurance products offered by insurers with whom they have agreements on their designated website. This transparency aids consumers in making informed decisions about insurance products.
2. Information Security Standards
Prioritising the security of information systems, including both hardware and software, is of utmost importance. Insurance Web Aggregators are obligated to adhere to recognised information security standards and protocols applicable in India. This commitment extends to the protection of their aggregation websites, portals, Lead Management Systems and Data Centres.
3. Data Encryption
Insurance Web Aggregator compliances involve guaranteeing the secure transmission of leads and other data to insurers and other relevant parties. This entails the use of data encryption technologies such as 128-bit encryption to protect sensitive information during transmission.
4. Annual Security Audits
Information systems, including aggregation websites, portals, Lead Management Systems and Data Centres, must be hosted within India. These systems should undergo security audits conducted by CERT-In empanelled Information Security Auditing organisations annually. A copy of the Audit Certificate or Report must be promptly submitted to both the insurance regulatory authority and the insurers with whom the aggregator has agreements, within 15 days from the date of receipt.
5. Statutory Auditor Certificate
Annually, Insurance Web Aggregators must submit a certificate obtained from their statutory auditor, along with the annual report. This certificate serves as confirmation that the aggregator is in full compliance with all provisions and the framework established in the IRDAI Insurance Web Aggregator Regulations of 2017.
These additional Insurance Web Aggregator compliances are designed to strengthen the security, transparency and regulatory adherence of Insurance Web Aggregators' operations, ultimately benefiting consumers and insurers alike.
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