Why Insurance Comparison portals in India request you enter data? Why they always insist you buy a particular product? Have you thought on this? Let us see the reasons behind this.
Many of us when decided to buy term life insurance, health insurance or car insurance, we want to Google it about the product. Because we want some positive signals towards our buying. Therefore, we Google and land on few Insurance Comparison portals in India.
Suddenly, before displaying their data, these Insurance Comparison portals in India request you to share your personal data like mobile phone number and email ids (in some cases even the city where you are from).
We are at free flow in sharing our personal data. Because we know they just show us product comparison, but they are never going to sell anything to us. Therefore, what is the fear in sharing the personal information?
However, the reality is something different. They act exactly like your Life, Health, or General Insurance AGENTS. Before proving my points, let us see what regulator says about these Insurance Comparison portals in India.
Such Insurance Comparison portals in India are called WEB AGGREGATORS. This means portals, which give you a comparison list of products based on your inputs. It is easy for buyer to short list when he saw the different comparison.
First, let us see the revenue model of these Insurance Comparison portals in India approved by IRDA. These are the points, which are mentioned in Insurance Web Aggregators Regulations 2016. Highlights of these are as below.
# No leads means no earning.
Yes, if these Insurance Comparison portals in India provide insurance leads to insurance companies, then they will not earn any commission or earnings. Therefore, the rationale behind data collection is to make sure you buy the product.
# Leads converted to sales means earning of commission.
Once, these Insurance Comparison portals in India provide leads to insurance companies and such customer buy the product, then these web aggregators earn the commission.
Note that, the commission may be in endowment plans, ULIPs, term life insurance, health insurance, or car insurance. Therefore, never be in the wrong belief that ONLINE insurance or products means you are SAVING commission of the agents.
There is still a commission structure included in premium for online plans also. Because insurance companies have to pay commission to these web aggregators.
The commission structure is as per the remuneration applicable to insurance intermediaries. Hence, the commission is equal to a typical insurance agent.
# Insurance Comparison portals in India collect fees from insurance companies to show the products
You may not aware of such earning module of these web aggregators. But the reality is something different. These Insurance Comparison portals in India are allowed to collect a maximum of Rs.50,000 per year and per product to be displayed on their website.
Therefore, it clearly shows that such we aggregators will not display you the products which are available in India. But they display you the products for which they get the fee for displaying the products. In such a situation, how we assume that we shortlisted the product which is the BEST in the Indian market?
Few best products may not be in their list because the insurance companies may not agree to pay the fee for displaying on these web aggregators portals.
# They are allowed for telemarketing
To close the sales, they are allowed to call you, send SMS or email you. Hence, this is all considered as “distance marketing activities” by IRDA.
With such move, what is the difference between a typical insurance agents to these web aggregators?
# Insurance companies pays for after sales service
Insurance companies pay service charges to provide the service for those policies, which are sold through web aggregators. Hence, here too there is nothing called free service.
I am not sure why such expenses to be payable by insurance companies when these web aggregators earning the commission as per insurance intermediaries.
Even though there are some strict rules to abide the laws of the insurance industry, but I feel the real motive of providing an unbiased comparison is lost. Because these web aggregators purely act like an agent. In such a situation, how we can expect unbiased comparison?
Hence, next time when you Google for buying any insurance product, beware that you are interacting with an AGENT but not a website which only providing you the comparison of product.
When other financial products are available without these web aggregators, then why IRDA provided such platforms for selling insurance products? For example, in the case of mutual funds, there are many such product rating and comparison portals, which are generating their revenue based on the quality content they provide.
Why such a special status for web aggregators? In what way they help the buyers in short listing the unbiased product.