Consumers are set to benefit as Irda’s draft guidelines for insurance

ONLINE AGGREGATORS

Irda's directive, your gain

Consumers are set to benefit as Irda's draft guidelines for insurance websites assure more accurate information and restrict the use of clients' personal details.

PREETI KULKARNI 

    If you've been planning to buy life insurance but can't zero in on the product with the least premium, your best bet would be the Internet. A few clicks of the mouse across aggregator websites and you can have all the information you need, ranging from the policies' features to their cost. Such websites broaden the choice for the buyer by allowing him to compare products from different insurers. The customer is bound to get the best deal, right? Well, not always. 
    "Many portals are not making the effort to update the policy details, resulting in outdated information being passed on to the users," says Rahul Aggarwal, CEO, click2insure.in. For consumers, it means that what they see isn't necessarily what they will get. They may be latching on to the wrong product. 
    This, besides several other problems related to aggregator sites, has led the Insurance Regulatory and Development Authority (Irda) to come out with draft norms for these outfits. Another major issue is that some of the aggregators pass on clients' or even visitors' contact details and other vital information to brokers and service providers for a fee. In fact, most web aggregators merely act as lead generators, who pass on this information. For instance, if the visitor has expressed his or her preference for some product after comparison, they pass the information on to the insurance company. If the aggregator site sells your personal details to a third party, your name could land in a database. This could mean that you are flooded with a lot of spam: calls, SMSes and e-mails. 
    "Many aggregators simply sell the information to insurers, who then contact the customers to make their sales pitch," says Aggarwal. Concurs Mahavir Chopra, head, ebusiness, medimanage.com, a health insurance aggregator: "Today, some websites sell leads to anyone who wants to buy them. The regulations regarding privacy of the customer are not very clear. How the contact information of the customer is used is also not clear," he adds. 
    To begin with, all aggregator sites will have to register with Irda. This will mean closer scrutiny by the regulator and it will also help protect the rights of the consumer. Secondly, all sites will have to provide the latest information on features and premium rates. "The price comparisons shall have to be up to date and reflect a true picture of the products," states the Irda circular proposing the draft guidelines. The insurers will also have to provide information on all policies from all insurers in a particular segment. So, an aggregator will not be able to push only those policies that earn it a fatter commission. The Irda has also placed a ceiling on the commission itself. It cannot be more than 25% of the total commission paid on the policy in the first year. Also, it will be payable only on actual sales, not for providing leads. There is also a restriction on the number of brokers and insurers with whom the aggregator can share information on potential customers. After all, it's important that the aggregator transmit your personal details to other agencies in a responsible manner. "If the guidelines are implemented, the fee will 
    be linked to actual sales and, thus, they will pass on this information to fewer insurers," says Aggarwal. 
    "The norms could help filter out aggregators who lack credibility. At the same time, it could regulate the quality of information being provided to the customers who are trying to analyse options, as well as the data that is being passed to lead buyers," says Chopra. 
    Once these norms are implemented, you could buy insurance products with the satisfaction that comes from dealing with regulated entities. "For a customer, it is a win-win situation. It's a free service; you can compare price and features; it's non-intrusive, and the decision need not be taken under pressure from an agent trying to coax you into buying," says Deepak Yohannan, CEO, myinsuranceclub.com. Adds Karanvir Singh, director, sales and distribution, Max Bupa: "Buying health insurance, especially for the first time, calls for research on the available products and their suitability." To that end, web aggregators play an important role of providing objective information. Now, under Irda's supervision, they will become better.

King of Reinsurance

Orissa-born Ajit Jain is the key lieutenant of legendary billionaire investor Warren Buffett, the Oracle of Omaha, report Sruthijith KK & Shilpy Sinha

Afew years after Ajit Jain went to work for Warren Buffett, the legendary investor wrote to his parent in New Delhi, asking if they had one more son like him at home. "Of course I knew the answer before writing. There isn't anyone like Ajit," Buffett recalled in his annual letter to shareholders in 2007.
Jain's parents were naturally overjoyed. "To my absolute embarrassment, they framed that letter and put it right in the middle of the living room. I had to put my foot down and get that out because it was so awkward," 59-yearold Jain, among the most successful business executives to be born in India, told ET.
Buffet, the world's most successful investor and third-richest man, has been showering high praise on Jain in his famous letters to investors year after year. "Even kryptonite bounces off Ajit," he wrote in 2010, describing the outsize achievement of the Orissaborn executive, who heads Berkshire Hathaway Reinsurance Group, a giant business that is at the heart of Buffett's sprawling empire.
Jain, the Superman of Buffett's world, has been for years been considered a leading contender for the ultimate prize at Berkshire Hathaway, indeed anywhere in the business world today—the job of the CEO of the diversified $136 billion group, succeeding 80-year-old Buffett.
"I truly believe I have the best job in the world," says Jain, whose friendly and unassuming manner can fool people into underestimating his wisdom, stature, and achievement.
If little is known about Jain in his home country despite his stellar achievements, it is because he is reluctant to talk about himself. "The real story is about Berkshire and our insurance business, but ok…" he hesitatingly said, relenting to ET's repeated probing about the life and times of a towering business figure.
He says he has been extremely fortunate to be working with Buffett. That is why he hasn't budged from the reinsurance division he joined in 1986. "The opportunity to work for Warren is like winning a giant lottery. Quite honestly, no amount of money can substitute for working for a boss for whom you have the utmost respect, almost to the extent of worshipping him; who has treated you more than fairly; who you have learned a lot from," he said, letting us in on why nobody in America has been able to poach away Buffett's prized warhorse.
How does he react to the praise the world famous investor heaps on him? Does it distract him, and does it spawn jealousy among his peers? "He is very kind with his words. I wish I do something to deserve it some day," Jain says, meaning every bit of it.
But Jain says there is no jealousy among other CEOs of the group or his peers. "That is certainly not the Berkshire culture. We are a collegial group. Each one runs his group with no interference from others. On the contrary, I certainly see a lot of my colleagues celebrate and genuinely compliment me in terms of what Buffett has to say."
Jain was born in Orissa, but his roots are in Rajasthan. He graduated from IIT Kharagpur in 1972. Having the IIT name on his resume opened a lot of doors initially, he says. For his first job at Tata Steel Company, and then in securing admission at Harvard Business School for an MBA.
But he says he wouldn't recommend any 16-year-old spends five years growing up at an IIT. "It's tough work, good discipline to train your mind early on," he says. But IIT Kharagpur was a godforsaken place in those days, with no women and terrible food," he says, laughing.
Subsequent to HBS, Jain worked at McKinsey, where his boss was one Mr Goldgerg, who subsequently moved to Berkshire Hathaway. "Buffett told him to find some people to join the new insurance business he was planning to enter. Goldberg, being a lazy guy, instead of doing a proper search, called his flunkey at McKinsey who had been useful in carrying his bags. That's how I went to work at Berkshire," Jain says. That operation would grow to become one of the largest insurance businesses in the world.
Jain says Buffett, his boss of quarter of a century, is an easy and flexible person to work with. "You get what you see. He is a very simple, down-to-earth person with very simple tastes. He loves what he does, enjoys his work, loves where he lives… He is just happy where he is."
Buffett looks for managers with a solid track record, Jain says. "He is looking for managers who love their businesses and love their work more than they love the money. People who have delivered over a meaningful period of time." Buffett especially watches out when he buys companies, Jain says. "When he buys businesses, he looks out for this. Because when someone sells a business to him, he gets a big cheque. If he loves the cheque more than the business, that manager is gone, and Buffett is not getting what he thinks he is buying." Jain says he doesn't worry about the succession issue one bit. "If you watch Buffett, he has more energy at his age than I have now. So I don't worry about the succession issue because I don't think about it at all," he says.
If a marquee building like the Sears Tower, once the tallest building in the world, wants to buy insurance, an insurer has to take on a huge deal of risk. Or if a massive sporting event, like the 2002 Winter Olympics wants to buy insurance, a year after 9/11 , you need to structure an extraordinary policy. If a high-profile baseball player wants to insure his health for the next ten years, days after signing the biggest contract in the history of the sport, you need to master the idea of risk to be able to write out a policy.
It's an esoteric world inhabited by the elite few of the financial services industry. The risks are enormous, and so are the rewards. Ajit Jain is the emperor of that world.
"From a standing start in 1985, Ajit has created an insurance business with float of $30 billion and significant underwriting profits, a feat that no CEO of any other insurer has come close to matching. By his accomplishments, he has added a great many billions of dollars to the value of Berkshire," Buffett wrote in 2010 in his letter to investors. With that kind of a track record, and impressive recommendations from a man admired by investors and businessmen, Jain seems set to take on any job, and any risk, in the world.
Board to Support Ajit for CEO: Buffett
NEW DELHI Berkshire Hathaway CEO Warren Buffett said directors would support Ajit Jain as the company's next head if the reinsurance executive decided to seek the post. "He loves what he does, he's not looking to take my job," Buffett said yesterday at a news conference in Bangalore. "If he was, the board of directors would probably put him in there in a minute." "Ajit has probably made a lot more money for Berkshire Hathaway than I have," Buffett said in his response to a question about whether Jain, 59, would succeed him. "I really feel about him like I would a brother or a son." — Bloomberg

MAN WITH MIDAS TOUCH: Ajit Jain, CEO, Berkshire Reinsurance