IRDA Web Aggregator License Fees, to this day, remains an enigma. Not many people are aware of it. And fewer are the people who have the ability to guess how high it can be. It’s perhaps the reason why there aren’t many insurance web aggregators in India.

Or perhaps, the reason is a bit more nuanced that just the high price of the IRDA web aggregator license.

Let’s dive into this blog and explore this topic.

Why IRDA web aggregator license fees get the blame for the lack of web aggregators?

Every business license in India has three types of costs. One is the government costs. The second is the professional cost. And the third, are the hidden costs:

1. The government cost to become an IRDA web aggregator does not only include application processing fee. It also includes:
   1. Cost to train a principal officer
   2. Cost to setup a company.
   3. Cost to run a background check on the people seeking Web aggregator license.

When you combine all the above factors, the cost tends to be high. Most that approach us with the requirement of irda license, don’t know the first thing about a principal officer, or a company.

2. The professional cost to become an IRDA web aggregator does not only include the application filing fee, it also entails:
   1. The cost of putting together the document.
   2. The cost to assisting you to become a principal officer
   3. The cost of running follow-ups with the IRDA

People have the perception that when a consultant is going to provide all the above services, the cost would be as advertised. That’s hardly the case.

3. The hidden costs to become an IRDA web aggregator: It can include anything from the cost to remove a specific error or the creation of an obscure document that’s not mentioned in any IRDA guideline.

The high government fee, the misconception regarding the professional costs and the hidden costs is the reason IRDA web aggregator license fee gets blamed for the lack of Web aggregators in India.

But it’s not the only one that’s to blame for this plight.

Reasons for the lack of Insurance web aggregator in India

Insurance web aggregator is a new type of business. There is still a lot that the Insurance Regulatory Development Authority of India has left undefined. That’s why people are still ignorant about it. Combining these factors, we get the following three reasons for the lack of business web aggregator in India:

1. People don’t understand the scope of the Insurance web aggregator license:

An insurance web aggregator is someone who provides a portal that visitors can use to browse through insurance policies and buy the one they like. For such a portal to be successful, it has to provide unbiased information. It’s this “unbiased” factor that the current holders of the license can’t grasp properly. Recently, PolicyBazaar – India’ most popular insurance web aggregator – has recently been penalized for INR 1.11 Crore. The reason: promotion of a particular insurance policy. It tried to go beyond the scope of the IRDA license is now facing charges.

2. Lack of understanding of the Insurance web aggregator business model:

The current syllabus that IRDA implements to train principle officers is lacking. While the principal officers gain an understanding of the policies of Web aggregators under IRDA, they can’t grasp much about the business model. The insurance web aggregator business model is intertwined with its policies. There is not much room for creativity and even less room for true diversity. This lack of understanding is another reason not many are coming forward to start a business as lucrative as insurance web aggregation.

3. Perception that people won’t buy insurance policies online:

Historically, people mostly have bought insurance policies via either corporate agents or paying a physical visit to insurance companies. However, the playing field is now shifted online. People are now going online to peruse through insurance policies and buy them. However, most companies are still under the impression – either because of lack of access to or lack of trust in the online model – that people won’t buy important services like insurance via online mode.

Solutions to promote Insurance Web Aggregator as a Business in India

Whether there is a problem, there are solutions. And the solution to deal with the lack of insurance web aggregator problem in India comes down to three points:

1. Making people better understand the scope of the license: Most notifications about insurance policies are filled with difficult legal technical terms. While it’s understandable to use it to remove any sort of ambiguity, it doesn’t make sense to use these notifications to spread awareness about the license. What the government need to do is sponsor someone to write content about the insurance web aggregators in simple terms.
2. Teaching about the Insurance web aggregator business model: The business model for insurance web aggregator is complex. The aspirants of such business thus need special classes where they can understand it properly. Once they are able to understand the business model, they will be able to use it creatively to make their insurance web aggregation business more than “just an online portal”.
3. Changing perception of the business owners about internet: The government is promoting internet business everywhere their go. It’s their main agenda in their election rallies and also makes its way into the discussion about their policies. They only need to do one thing to change business folk’s perception about insurance policies, talk about it. If our Hon’ble prime minister can make time to at least once, discuss insurance web aggregator through his “Mann ki Baat”, all will know the value of insurance web aggregators in India.

Conclusion

Insurance web aggregation, as a business, is quite new. As fewer people know about it, there are narrow perceptions business owners have about it. So, to say that the license fees is the problem for the lack of web aggregators in India, would be wrong. If we can just come together to spread awareness about it with the aid of government assistance and training, this lack of insurance web aggregators in India will go away.

Is IRDA web aggregator license fees the only reason for the lack of insurance web aggregators in India? Or there is something more?