policybazaarOnline insurance policy company Policybazaar.com has raised $5 million (around Rs 27.5 crore) in Series B funding from investors including Inventus Capital and others. Info Edge has invested Rs 2.5 crore of this amount, which takes its total investment to Rs 32.5 crore, and its stake in PolicyBazaar to 32%.

PolicyBazaar intends to use the money for strengthening its brand and enhancing its platform and customer service. In the last round, the company had raised $9 million (around Rs 40 crore) from Intel Capital (Rs 30 crore) and Info Edge (Rs 10 crore). At that time, PolicyBazaar CEO Yashish Dahiya had said that it was the last round they were raising before an IPO, but it looks like things have changed since then. At the time, the shareholding was split almost equally between the promoters, Info Edge and Intel Capital, and that would have changed too. PolicyBazaar claims over 20 million odd unique visitors.

How Has PolicyBazaar’s business Model Changed?

What we’re particularly curious about is how PolicyBazaar monetizes. In 2011, India’s Insurance Regulator put in significant restrictions on the activities of what were then web insurance aggregators. We’re not certain of the business model in operation now, and we’ll try and get more on this, but here’s how the policy change impacted insurance aggregators at that time:

– Web aggregators will have to apply to receive an approval from the IRDA, in order to be allowed to offer web aggregation of insurance. The application fee was Rs 10,000, and a web aggregator needed to have a net worth of Rs 10 lakhs. Approvals would be for a period of three years.
A flat fee not exceeding rupees one lakh per year towards each product displayed by the web aggregator in the comparison charts of its web site.
Cost Per Lead: Maximum rupees 10 per lead transmitted by the web aggregator.
Fixed commission: Not more than 25% of the commission payable or actually paid, whichever is lower, on the first year premium of the first policy sold on the basis of the lead obtained from the Web aggregator. In case of life insurance policies procured, where the premium is payable in other-than-yearly mode, the fee or remuneration shall be paid only to the extent of the first year premium installment/s and that have been received by the insurer. In case of long-term policies under general insurance, the fee or remuneration shall be paid only to the extent of the premium installment/s in the first year of the policy and that have been received by the insurer.
No Advance Payments: “An Insurer / Broker shall not make any payment, by whatever name called, in the form of advance to a web aggregator.”
Fixes Agreement Terms: The authority had said that an agreement between the web aggregator and the authority shall necessarily include remuneration for the leads to be shared, time-frame and mode of transmission of leads to be shared, onus of complying with regulatory and other legal requirements on both the parties to the agreement and Identifying the different data elements to be shared (name of prospect / client (visitor of the web site), contact details etc).
No comparison of insurance products: The guidelines state that “No person shall offer comparative information on insurance products on the websites owned, maintained, serviced or being utilised in any other manner by him for the purpose of transmitting leads to any entity engaged in insurance business except as provided under these guidelines.”
Disallows ratings, advertisements: “Web aggregators shall not display ratings, rankings, endorsements or bestsellers of insurance products on their website. The content of the websites of the web aggregators shall be unbiased and factual in nature; they shall desist from commenting on insurers or their products in their editorials or at any other location in their websites.” In addition, “Web aggregators shall not carry any advertisements or sponsored content on their websites.”
Defines Lead Generation Time Limit, Sharing Terms: “Web aggregator shall not transmit the data of a client to Insurer(s) other than the one(s) preferred by the client”, and shall at maximum, share a lead with three insurers, or one insurance broker, in case the client doesn’t specify a particular insurance agent. There is another clause that suggests that a lead can only be shared no more than 5 days of “the visit to the web site”.
Defines Comparison Terms: “The default/home page of the websites of the web aggregators shall clearly and prominently provide links to the product comparison charts and tables for each category of products covered by them. The visitor to the website should be given clear product options to choose from and once a particular option is chosen, a product comparison chart relevant to his choice shall be displayed. The product comparison chart shall have, interalia, columns to display a) the premium quoted by each insurer relevant to the age, health and other personal details of the client for the product category, policy/premium term, quantum of cover etc chosen b) the default underwriting requirements such as medical examination, diagnostics or other documents c) exclusions, limits or other conditions, if any c) key features of the product chosen.”