How to Start a INSURANCE WEB AGGREGATOR LICENSE

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Overview of Insurance Web Aggregator License

In India, Insurance Web Aggregators provide consumers with the ability to compare various insurance products available in the market. These platforms offer an overview of features, prices, and other details of different insurance policies, helping buyers make informed decisions. However, before engaging in any aggregation activity, Insurance Web Aggregators are required to obtain an Insurance Web Aggregator License from the Insurance Regulatory and Development Authority of India (IRDAI).

The primary objective behind the introduction of Insurance Web Aggregators in India was to raise awareness and educate people about various insurance products. Traditionally, individuals relied on insurance agents to purchase policies, often facing high commissions. To combat this, the IRDAI introduced a transparent, digital, and regulated platform to reduce the malpractice of excessive agent commissions and provide users with better access to policy comparisons.

Concept of Insurance Web Aggregator

An Insurance Web Aggregator collects, organizes, and maintains data about various insurance products offered by different insurance companies. The gathered information is made available through an online portal, enabling consumers to compare policies in a convenient and accessible manner. These activities are governed by regulations established by the IRDAI, along with provisions from the Insurance Act and the Companies Act. To operate as an Insurance Web Aggregator in India, a company must obtain the necessary license from the IRDAI.

Legal Framework for Insurance Web Aggregator License

The following legal provisions govern the Insurance Web Aggregator License in India:

  • The Insurance Act, 1938
  • The Insurance Regulatory and Development Authority of India (Insurance Web Aggregator) Rules, 2017
  • Mandatory Guidelines for Insurance Web Aggregators

IRDAI Guidelines for Insurance Web Aggregators

The IRDAI has laid down specific guidelines for Insurance Web Aggregators to ensure transparency and fairness in their operations. These include:

  • Insurance Web Aggregators must not promote products or services of any single insurer.
  • They are required to provide product comparisons based on an unbiased analysis report.
  • The pricing of each insurance product must be displayed clearly.
  • Rankings, ratings, and highlighting of best-selling products are prohibited.

Role of Insurance Web Aggregators

In India, Insurance Web Aggregators play a vital role in:

  • Expanding and growing the online market for insurance products.
  • Enhancing the customer’s experience during the purchase process.
  • Assisting customers throughout the entire purchasing journey.
  • Making the insurance sector more transparent and user-friendly.

Functions of Insurance Web Aggregators

The key functions of Insurance Web Aggregators include:

  • Displaying detailed information about various insurance products on their platforms.
  • Offering an unbiased comparison between different insurance policies.
  • Sending potential leads to the relevant insurance companies.
  • Selling insurance products through telemarketing services.
  • Soliciting insurance products based on the leads generated via the website.

Criteria for Insurance Web Aggregator License

To obtain an Insurance Web Aggregator License in India, the applicant must meet the following requirements:

  • The applicant must be a company registered under the Companies Act, 2013, or a Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008.
  • The company's Memorandum of Association (MOA) must authorize it to engage in the business of web aggregation for insurance products.
  • The company must exclusively engage in web aggregation and cannot undertake any other business activities.
  • The applicant must not be engaged in any other roles such as:
    • Insurance Agent
    • Company Agent
    • Micro-Insurance Agent
    • Third-Party Administrator (TPA)
    • Surveyor and Loss Assessor
    • Insurance Marketing Firm
    • Any other insurance intermediary
  • The applicant should not have any referral relationships with insurers.
  • The company must have a dedicated platform to carry out the activities of an insurance web aggregator.
  • The Principal Officer appointed must meet the qualifications and experience prescribed by the Insurance Regulatory and Development Authority of India (IRDAI), and must have passed the necessary training and exams required by the IRDAI.
  • Directors, Principal Officers, promoters, partners, shareholders, or Key Management Personnel (KMP) must meet the "fit and proper" criteria as set by the IRDAI.
  • The Authorized Verifier should have the prescribed training and experience.
  • The Insurance Web Aggregator must not engage in activities prohibited by the IRDAI regulations.
  • The IRDAI must not have rejected the applicant's previous application for an Insurance Web Aggregator License.
  • The applicant must not have withdrawn their application for the license in the previous financial year.

Capital and Net Worth Requirements

  • Minimum Capital: The company must have a minimum paid-up capital of Rs 25 Lakhs. This capital can be raised through the issuance of equity shares as per the provisions of the Companies Act, 2013. For LLPs, contributions from partners must be in cash. The foreign investment in the company must not exceed 49% of the paid-up equity capital.

  • Net Worth: The net worth of the Insurance Web Aggregator must never fall below the minimum capital requirement. The net worth must be reviewed every six months (by 30th and 31st March). In the event of non-compliance, the company must file a report within 15 days and take corrective measures within 30 days. If the net worth is not restored within 30 days, the company must cease all business activities. A Practising Chartered Accountant must certify the net worth after finalizing the company's books of account.

Documents Required for Insurance Web Aggregator License Registration

To apply for an Insurance Web Aggregator License, the following documents are required:

  1. A copy of the Certificate of Registration (COR) issued by the Registrar of Companies (ROC).
  2. Certified copies of the Memorandum of Association (MOA) and Articles of Association (AOA), verified by a Chartered Accountant.
  3. A certified copy of the Limited Liability Partnership (LLP) Agreement, certified by a practicing Chartered Accountant.
  4. A copy of the company’s PAN Card.
  5. Resumes or CVs of the designated partners or directors, along with their qualification and experience certificates.
  6. Resume of the Principal Officer, including their qualification and experience certificates.
  7. Proof of address for the office from which the website will be hosted. This can be the registered office or any other operational office.
  8. List of individuals authorized to manage and update the insurance products, comparisons, and guides on the website.
  9. A certificate from a practicing Chartered Accountant, confirming the shareholding pattern and the company's net worth.
  10. Copies of the audited financial accounts, balance sheets, and annual reports for the last three financial years.
  11. A detailed business plan for the next three years.
  12. Information about the company's infrastructure, including IT resources.
  13. A human resources chart showing the roles and responsibilities of each employee.
  14. Training and qualification certificates for the Principal Officer and authorized verifiers.
  15. Details and declarations regarding the fit and proper criteria for directors, partners, principal officers, promoters, and Key Management Personnel (KMP) in Form D of the regulations.
  16. A user ID and temporary password for IRDAI’s IT department to verify the insurance web aggregation website in a sealed cover.
  17. A notarized self-certification by two directors or designated partners, affirming:
  • The Director and Principal Officer are of sound mind, major, and have not been convicted of crimes such as fraud, cheating, forgery, or violations of trust within the past five years.
  • The directors or applicants have not been involved in any economic offenses within the last three years.
  • The company will maintain a minimum net worth of Rs. 25 lakhs during the period of the Registration Certificate.
  • The Principal Officer, Director, or applicant is not registered as an insurance agent, corporate agent, micro-insurance agent, TPA, surveyor, insurance broker, or any other insurance intermediary under IRDAI regulations.
  • The applicant company or its directors/principal officers are not related to any insurance brokers, TPAs, insurers, surveyors, corporate agents, micro-insurance agents, or other insurance intermediaries during the application process and will maintain this status throughout the validity of the registration.
  • No directors or employees hold directorships or employment with any other insurance-related entity.

Procedure for Insurance Web Aggregator Registration

The process for obtaining an Insurance Web Aggregator Registration involves several steps, as outlined below:

  1. Filing the Application with IRDAI
    To obtain an Insurance Web Aggregator license, the applicant must submit an application to the IRDAI in Form A, as specified in Schedule I of the IRDAI Regulations.

  2. Required Documents and Fees
    The directors of the company must file the application along with the necessary documents. A prescribed application fee of Rs. 10,000, plus applicable taxes, must be paid through a Demand Draft (DD) to the IRDAI. Applications without the required fee will not be processed. The application should also include a comprehensive five-year business plan outlining the company's objectives and financial projections.

  3. Eligibility Criteria
    The company must ensure that it meets the eligibility requirements before submitting the application. If the company plans to engage in telemarketing or outsourcing, it must explicitly mention this in the registration application.

  4. Rejection of Application
    The IRDAI has the authority to reject applications that do not comply with its conditions. In cases where there are errors or omissions, the Authority will grant the applicant thirty days to rectify the mistakes before rejection.

  5. Additional Information
    The IRDAI may request additional information or clarification regarding the documents or details submitted by the applicant. Responding to queries from the IRDAI is a multi-step process, and applicants may need to submit multiple replies to a single query. If the applicant fails to respond within thirty days of receiving the communication, the application may be rejected, and the applicant will need to submit a new application.

  6. Grant of License
    If the IRDAI is satisfied that the information and documents submitted are accurate and complete, and if it believes that granting the license is in the best interest of policyholders, the IRDAI will issue a certificate of registration to the applicant.

  7. Validity Period of Insurance Web Aggregator License
    The Insurance Web Aggregator License issued by the IRDAI is valid for three years from the date of issuance. To continue operations beyond this period, the web aggregator must apply for a renewal at least thirty days before the expiration of the license.

Renewal of Insurance Web Aggregator License

An Insurance Web Aggregator must apply for the renewal of their license to IRDAI using Form-F before the registration expires. However, the application for renewal can be submitted up to 90 days prior to the expiration date, following the process specified by IRDAI. Along with the renewal application, the web aggregator must submit the documents listed in Form G of the regulations and a renewal fee of Rs. 25,000 plus applicable taxes.

If the renewal application is not submitted to IRDAI at least 30 days before the registration expiry, an additional fee of Rs. 100 per day will be charged. IRDAI may accept the renewal application up to 60 days after the expiry date, provided the applicant pays an additional fee of Rs. 750.

IRDAI will approve the renewal of the license once it is satisfied that the web aggregator meets all the conditions outlined in Form-H of the regulations. Renewal may be denied if it is determined that the web aggregator has not engaged in any insurance business, either partially or fully, during the previous registration period.