Company as an Other Service Provider OR as a Web Aggregator of Insurance Services

Company as an OSP

‘Terms and Conditions – Other Service Provider (OSP) Category (“OSP T&C”) defines OSP as a company providing ‘Application Services’, like, tele-banking, tele-medicine, tele-education, tele-trading, e-commerce, call centre, network operation centre and other ‘IT Enabled Services’, by using ‘Telecom Resources’ provided by Authorised Telecom Service Providers. The term ‘Telecom resources’ is defined under OSP T&C as Telecom facilities used by the OSP including, but not limited to Public Switched Telecom Network (PSTN), Public Land Mobile Network (PLMN), Integrated Services Digital Network (ISDN) and /or the telecom bandwidth provided by authorized telecom service provider having valid licence under Indian Telegraph Act, 1885.

Such OSP’s using telecom resources are mandatorily required to ensure that they are registered with the Department of Telecommunications.[1] Registration of OSPs is done by the respective Telecom Enforcement, Resource and Monitoring (TERM) Cells[2] as per the location of the OSP. Any company providing application services may be given registration provided those companies has to be registered under Indian Companies Act. The registration is location specific, so a company may have more than one registration. The validity of the registration is 20 years from the date of issue, unless otherwise mentioned in the registration letter.

Under Chapter-V (Security Conditions) of these OSP T&C, OSPs are required to take necessary measures to prevent objectionable, obscene, unauthorized or any other content, messages or communications infringing copyright, intellectual property etc., in any form, from being carried on the network. Once specific instances of such infringement are reported to the OSP by the law enforcement agencies, the OSP must ensure that the carriage of such material on the network is prevented immediately. Under Chapetr-VI (Miscellaneous), OSP is also responsible for any violation of the said rules by anyone including but not limited to its employees and for ensuring the correctness of the information furnished.

In nut shell, all the terms and conditions as applicable to OSP under OSP T&C, will also apply to this Company accordingly.

Company as a Web Aggregator of Insurance Services

A Company would fall under the definition of “web-aggregator” under the Insurance Regulatory and Development Authority (Web Aggregators) Regulations, 2013 (“WA Regulations”) to the extent it provides and enlists insurance services on its online portal. Some of the key requirements under WA Regulations are-

• Obtaining License as Web Aggregator as per Schedule 1, Form-A of WA Regulations by making an application to the Authority for which the applicant must satisfy the eligibility criteria under Reg. 3 of WA Regulations;
• Paying annual license fee of Rs. 5000/- before the expiration of 15 days of finalization of annual audited accounts of the Web Aggregator or till the 30^th of September, whichever is earlier by an Account Payee draft in favor of ‘The Insurance Regulatory and Development Authority’ payable at Hyderabad.
• MoA of the Company must contain Web Aggregation as one of its main objects;
• Maintaining a net worth of at least Rs. 10 Lakhs from the date of application till the entire license period and submitting a net worth certificate duly certified by a CA to the Authority every year after finalization of the books of accounts;
• Maintaining a professional indemnity insurance coverage on a yearly basis throughout the validity of the license period;
• Displaying information pertaining to all the insurers who have signed an agreement with the Web Aggregators.
• Ensuring that the leads and other data is transmitted to the insurers and others using secured layer data encryption technologies like 128 bit encryption.
• Ensuring that the information systems, (both hardware and software) including the aggregation website(s) / portals, Lead Management System and the Data Centers hosting the website(s) / Portal(s) / Lead Management System are- (a) in compliance with the generally accepted information security standards and procedures in force in India from time to time, and (b) audited by CERT-In empanelled Information Security Auditing organisations once in a financial year and a copy of the Audit Certificate/Report to IRDA and the insurers with whom the web aggregator has entered into an agreement, is submitted within 15 days from the date of receipt of the same.

Following are few key restrictions on the Company under WA Regulations as a web aggregator-

• Refrain from displaying information pertaining to any products or services of other financial institutions and displaying advertising of any sort;
• Refrain from operating multiple websites and tying up with any other licensed or unlicensed entities or websites;
• Refrain from operating the websites of the other financial/marketing/sales/commercial/social network services for comparison of products;
• Desisting on commenting on insurers or their products in their editorials or any other location on their website;
• Refrain from carrying any advertisements or sponsored content on their websites.
• No referral arrangement with an Insurer;

Similarly, there are other obligations and restrictions under the WA Regulations which the Company must abide by, if it is providing such services in respect of insurance as well. In addition, the Company as an approved web aggregator must enter into an “agreement” in accordance with Reg. 12 of the WA Regulations. In case a licensed Web Aggregator violates any of the provisions of Insurance Act, 1939, IRDA Act, 1999 and Rules and Regulations made thereunder, any circular/guidelines/orders issued by the Authority from time to time, the concerned Authority may impose appropriate penalty depending on the nature/gravity of violation.[3] WA Regulations will apply to the Company only when it is not a Referral Company with a Referral Arrangement under the IRDA (Sharing of Database for Distribution of Insurance Products) Regulations, 2010.

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[1] Instructions regarding Telecom Resources issued to all OSPs given at Annexure -II.Dt. 22^nd February, 2007 by the Department of Telecommunications.

[2] Formerly known as VTM Cells

[3] Reg. 25 of WA Regulations