Irdai Imposes Penalty on Policybazaar for Regulatory Violations

The Insurance Regulatory and Development Authority of India (Irdai) has imposed a ₹5 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

1. Misleading Promotion: Marketed select ULIPs and health plans as “Top Plans” without objective criteria, misleading consumers and implying false IRDAI endorsement.
2. Governance Conflicts: Senior executives held undisclosed roles in other insurance firms, breaching IWA Guidelines on neutrality.
3. Delayed Premium Remittance: Failed to transfer collected premiums to insurers on time, risking policy delays.
4. Outsourcing & Commission Breach: Paid unregulated commissions to third parties without formal agreements, violating IRDAI norms.
5. Policy Mapping & Call Record Lapses: Around 1 lakh telemarketed policies were unmapped; call records were incomplete, breaching compliance rules.

IRDAI Guidelines Violated

1. Biased Promotions
   • IRDAI Web Aggregators Regulations, 2017: Prohibits ranking products as “top” without objective criteria.
2. Governance Conflicts
   • IRDAI Guidelines, 2017: Prior approval required for Key Management Personnel (KMPs) holding directorships in other insurance entities.
3. Premium Remittance Delays
   • Web Aggregators Regulation 10(2): Premiums must be remitted to insurers within stipulated timelines.
4. Outsourcing Violations
   • Outsourcing Guidelines, 2017: Requires written agreements, prohibits unauthorized payouts or commissions.
5. Policy Mapping & Call Recording
   • Web Aggregators Regulation 13(5): All sales calls must be recorded and mapped to authorized personnel.
6. Unauthorized Commissions
   • Commission Regulations, 2023: Caps on commission payments; deviations need IRDAI approval.
7. Corporate Governance Lapses
   • Governance Guidelines, 2020: Mandates disclosure of related party transactions, conflict-of-interest norms.

BS