🛡️ Policybazaar Fined ₹5 Crore by IRDAI for Misleading Promotions and Regulatory Violations
In one of the most stringent enforcement actions in India’s insurtech sector, the Insurance Regulatory and Development Authority of India (IRDAI) has slapped a hefty ₹5 crore fine on Policybazaar Insurance Web Aggregator Pvt. Ltd. The regulator cited 11 serious violations, ranging from deceptive promotional practices to governance lapses and delayed premium remittances.
🚨 What Prompted the Penalty?
The IRDAI’s 34-page order highlights how the once-celebrated digital insurance aggregator misused its platform to prioritise business interests over consumer welfare. The key allegations include:
🔹 Biased Promotions
Policybazaar promoted certain products from insurers like HDFC Life, ICICI Prudential, SBI Life, and Bajaj Allianz as “Top” or “Best” without any transparent, third-party ranking methodology. This was found to be a clear conflict of interest and a violation of consumer trust.
🔹 Delayed Premium Transfers
IRDAI found that Policybazaar used its payment gateway and retained customer premiums for extended periods, in some cases over 30 days, instead of transferring them to insurers within the legally mandated 24 hours.
🔹 Untraceable Sales Practices
Over 97,000 policies were sold through telemarketing agents without being mapped to Authorised Verifiers (AVs) — violating IWA norms and raising red flags on accountability and fraud prevention.
🔹 Governance Red Flags
Several key managerial personnel (KMPs) were discovered to be holding directorships in other firms without prior IRDAI approval, raising questions about transparency and regulatory ethics.
🧾 Penalty Breakdown
| Violation Type | Penalty | Core Issue |
|---|---|---|
| Biased Product Promotion | ₹1 Cr | Lack of third-party validation |
| Delayed Premium Remittance | ₹1 Cr | Holding customer funds illegally |
| Unmapped Sales | ₹1 Cr | Lack of AV tracking |
| Governance Lapses | ₹1 Cr | Unauthorized roles held by KMPs |
| Domain & Outsourcing Gaps | ₹1 Cr | Control and licensing ambiguity |
🏢 Policybazaar’s Response
Policybazaar — which received a composite broker license in February 2024 — has acknowledged the IRDAI order. The company has been asked to file a compliance report within 90 days. Insiders suggest a reshuffle of compliance leadership is likely in the coming weeks.
📉 Implications for India’s Insurtech Sector
This high-profile penalty raises the bar for compliance in India’s burgeoning digital insurance ecosystem. With over 4.2 crore policies sold and millions of users, Policybazaar’s actions influence the trust and structure of the entire insurance distribution landscape.
Experts believe this ruling could prompt other digital brokers to review their practices, especially in areas like product promotion, governance, and financial transparency.
#Policybazaar #InsuranceNews #FintechIndia #IRDAI #Regulation #InsurTech #IndiaBusiness #CorporateGovernance #DigitalIndia #ConsumerProtection
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