Insurance Web aggregators in IFSCA

The IFSCA Official has introduced a comprehensive framework for Insurance Web Aggregators (IWAs) operating within GIFT City IFSC. This framework sets forth detailed guidelines and requirements for entities to operate as IWAs, aiming to ensure transparency, accountability, and consumer protection.

Key Definitions

• Authorized Verifier: An employee of the Insurance Web Aggregator responsible for insurance solicitation and procurement through telemarketing and distance marketing.
• Distance Marketing: Solicitation or sale of insurance products where the consumer is not physically present.
• Insurance Web Aggregator (IWA): An intermediary registered by the Authority to assist prospects in purchasing insurance policies via a website or portal.
• Solicitation: Approaching a prospect with a view to convince them to purchase an insurance policy.
• Telemarketer: An entity registered with the Telecom Regulatory Authority of India for commercial communications.
• Lead Generation: Collecting details of prospects to ascertain their intention to purchase an insurance policy.
• Lead Management System (LMS): Software implemented by the IWA for recording, filtering, validating, grading, distributing, following up, and closing leads from website enquiries.

Eligible Entities

Entities eligible to apply as IWAs include:

• Insurance Web Aggregators registered with IRDAI.
• Insurance Brokers under the International Financial Services Centres Authority (Insurance Intermediary) Regulations, 2021.
• Companies incorporated under the Companies Act, 2013.
• Limited liability partnerships formed under the Limited Liability Partnership Act, 2008.
• Other persons permitted by the Authority.

Applicants must meet specific conditions, such as not having prior disqualifications under section 42 D of the Insurance Act, 1938, and ensuring they have the necessary infrastructure and qualified personnel.

Business Operations

IWAs must display product comparisons on their websites transparently and factually. They must disclose that visitors' particulars could be shared with insurers and ensure that product information is authentic and up-to-date. They are prohibited from displaying ratings or endorsements and must use a Lead Management System (LMS) for managing leads.

Lead Transmission

IWAs are required to share leads with insurers as per specified guidelines. They must use a secure LMS, provide options for visitors to select up to three insurers, and ensure the transparency and accountability of lead management.

Online and Distance Marketing

IWAs can use telemarketing and other distance marketing modes for insurance solicitation, provided they are registered as telemarketers and comply with the regulations. They must engage authorized verifiers and ensure their employees are trained and competent.

Networth Requirements

Applicants must maintain a minimum paid-up share capital of USD 30,000 and ensure their net worth equals 100% of the minimum paid-up share capital. Branch offices must maintain a capital of USD 3,000.

Indemnity Insurance

IWAs must obtain indemnity insurance to cover errors, omissions, negligence, fraud, loss of money or property, and document loss. The cover must be on a yearly basis and meet specific criteria, with limits based on remuneration received.

Fees and Tax Benefits

The fee structure includes:

• Application Fees: $500
• Registration Fees: $500
• Annual Fees: $200

IWAs in GIFT City IFSC enjoy significant tax benefits, including 100% tax exemption on business profits for 10 years out of the first 15 years of operation and a reduced MAT rate of 9%.

Code of Conduct

Conduct in Client Relationships

1. Utmost Good Faith and Integrity:
2. Care and Diligence:
3. Confidentiality:
4. Awareness of Client Understanding:

Conduct in Complaints Handling

1. System for Complaints:IWAs must have a system in place for recording and monitoring complaints from clients.
2. Complaints Handling Procedures:Websites must detail the complaints handling procedures and provide a facility for clients to log complaints online.IWAs must acknowledge client communications promptly, within a maximum of five working days.
3. Resolution of Complaints:IWAs should ensure grievances are resolved to the satisfaction of the client and that clients are informed about the resolution and further redressal procedures.
4. High-Level Attention:Complaints must be attended to at the level of Key Management Personnel.

Conduct in Advertising

1. Prohibition of Misleading Information:IWAs must ensure that their designated websites do not contain any advertisements or information prohibited under regulation 27.

Conduct in Remuneration

1. Disclosure of Remuneration:IWAs must disclose the amount of remuneration they receive if requested by a prospect.

Conduct in Training

1. Staff Competency and Training: IWAs must ensure their staff is competent, suitable, and has received adequate training. There should be a system to monitor the quality of advice given by staff.Staff should be aware of legal requirements, including the law of agency affecting their activities, and should only handle classes of business they are competent in.
2. Prohibition on Rebating :IWAs must draw attention to Section 41 of the Insurance Act, 1938, which prohibits rebating and sharing of commission/remuneration.

Display and Disclosure Requirements

1. Certificate of Registration: IWAs must display their Certificate of Registration and details of its validity on their website.
2. Insurer Agreements: Names of insurers with whom IWAs have agreements to refer leads must be prominently displayed on the home page of the website.
3. Product Listings: IWAs must display a list of products available for information on their designated website.
4. Client Information Sharing: IWAs must clearly indicate that the details of prospects visiting their website will be shared with insurers for the purpose of soliciting insurance policies.

Prohibitions and Restrictions

1. Third-Party Promotions: IWAs must not promote the services or products of any third parties on their designated website unless permitted by the Authority. No third party should be allowed to divert clientele to the website of the IWA without permission from the Authority.

Registration and Record-Keeping

1. Telemarketing Registration: IWAs wishing to carry out telemarketing must register as a Telemarketer.
2. Lead Management System (LMS):IWAs must maintain an effective Lead Management System and ensure leads are recorded and monitored through this system.
3. Activity Records: IWAs must keep records and reports of their activities under agreements with insurers, in the manner specified in those agreements.

Compliance with Legal Provisions

1. Regulatory Compliance:IWAs and their employees must comply with all provisions of the Insurance Act, 1938, the IFSCA Act, 2019, and other rules, regulations, and directions issued by the Authority.
2. Remuneration Limitations:IWAs must not accept any payment from insurers other than the remuneration specified in Regulation 26.

Prior Approval Requirements

1. Changes Requiring Approval: IWAs must seek prior approval from the Authority for changes such as: Change of Principal Officer Change in Directors or Designated Partners Change in company name Change of registered office or head office address Engaging third-party service providers for core activities Change of location of servers hosting the IWA’s website

Additional Obligations

1. Notice of Code of Conduct:
2. Return Submission:

This detailed code of conduct ensures that IWAs operate in a manner that is ethical, transparent, and beneficial to all stakeholders in the insurance ecosystem within GIFT City IFSC.

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