Context:
The Insurance Regulatory and Development Authority of India (Irdai) has imposed a â‚ą5 crore fine on Policybazaar Insurance Brokers for multiple regulatory violations, marking one of the more serious enforcement actions in the online insurance space.
Key Regulatory Violations
- Misleading Promotion: Marketed select ULIPs and health plans as “Top Plans” without objective criteria, misleading consumers and implying false IRDAI endorsement.
- Governance Conflicts: Senior executives held undisclosed roles in other insurance firms, breaching IWA Guidelines on neutrality.
- Delayed Premium Remittance: Failed to transfer collected premiums to insurers on time, risking policy delays.
- Outsourcing & Commission Breach: Paid unregulated commissions to third parties without formal agreements, violating IRDAI norms.
- Policy Mapping & Call Record Lapses: Around 1 lakh telemarketed policies were unmapped; call records were incomplete, breaching compliance rules.
IRDAI Guidelines Violated
- Biased Promotions
- IRDAI Web Aggregators Regulations, 2017: Prohibits ranking products as “top” without objective criteria.
- Governance Conflicts
- IRDAI Guidelines, 2017: Prior approval required for Key Management Personnel (KMPs) holding directorships in other insurance entities.
- Premium Remittance Delays
- Web Aggregators Regulation 10(2): Premiums must be remitted to insurers within stipulated timelines.
- Outsourcing Violations
- Outsourcing Guidelines, 2017: Requires written agreements, prohibits unauthorized payouts or commissions.
- Policy Mapping & Call Recording
- Web Aggregators Regulation 13(5): All sales calls must be recorded and mapped to authorized personnel.
- Unauthorized Commissions
- Commission Regulations, 2023: Caps on commission payments; deviations need IRDAI approval.
- Corporate Governance Lapses
- Governance Guidelines, 2020: Mandates disclosure of related party transactions, conflict-of-interest norms.
