Can’t stay in business, can’t get out. With no word yet from the insurance regulator on their licences, the web aggregators are in a fix.
The entities had filed for licences and were expecting clearance by February. However, Insurance Regulatory and Development Authority (Irda) is yet to grant any.
As such, following an directive in November last year, these portals have stopped showing product comparisons since February 1.
Web aggregators shall not display ratings, rankings, endorsements or bestsellers of insurance products on their website, the regulator had categorically stated, while putting in place strict dos and don’ts and mandating that they seek licences to be able to continue.
The new rules were a killer blow for web aggregators such as apnapaisa.com, isave.com, policybazar.com and myinsuranceclub.com, whose revenue model revolved around generation of leads for insurers by facilitating comparison of products.
Lead refers to information regarding a client who has accessed the site and submitted the contact details and had shown interest in buying it.
The aggregators earned Rs 80-90 per lead from the insurer or broker, irrespective of whether it led to an actual sale. Irda reduced this to Rs 10 per lead, which can be sold to a maximum of three players. This means they can now earn Rs 30 per lead compared with Rs 250-300 earlier.
Where a lead did convert into actual sale, the aggregator used to get the entire prescribed commission on the product. Now, however, they can take home barely 25% of the prescribed commission.
What’s more, subject to strict rules on the kind of advertisements they can carry, the portals can now earn only Rs 1 lakh from advertisements.
On top of all this, the delay in grant of licences!
This has forced the companies to contemplate a change in their business models.
Sites like apnapaisa.com and bimadeals.com have, in fact, started focusing on non-insurance avenues such as deals on loans and other investment products.
Some of the larger players are even planning to become corporate agents of specific insurers by forming 4-5 companies, said an industry official.
Under the rules, a corporate agent can tie-up only with a single insurer and involve in marketing and selling of products of that particular company.
A few players are even keen to turn the existing sites into paid advertisement sites for insurance products where the business of comparison will be done by an authorised third party.
Yet others are hoping the regulator will reconsider its stand and grant them licence for distant marketing (through emails and phone calls). We expect that the regulator will consider and allow the aggregators to do distance marketing as it is the only feasible option in the long run, said an official at a web aggregator.
By Aswathy Varughese & Nupur Anand
http://www.dnaindia.com/money/report_irdas-silence-weighs-heavy-on-web-aggregators_1675568
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