India: IRDAI Slaps ₹5 Crore Penalty on Policybazaar Insurance Brokers for Multiple Regulatory Violations
New Delhi – The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a hefty penalty of ₹5 crore on Policybazaar Insurance Brokers Pvt. Ltd. for multiple violations of regulatory norms, including biased product promotions and significant delays in remitting premiums to insurers.
In its official order issued on Monday, IRDAI cited violations of the Insurance Act, 1938, and associated rules, following a comprehensive inspection of the company’s practices. The regulatory action includes not only a financial penalty but also directions, advisory notes, and a formal caution to the company.
Formerly known as Policybazaar Web Aggregator Pvt. Ltd., the company was found to have engaged in practices that undermined consumer transparency and fair competition. One of the major concerns highlighted was the platform’s selective display and ranking of insurance products as “Top” or “Best” without offering adequate information or basis to justify such rankings. This misrepresentation, IRDAI noted, influenced buyer preference by unfairly promoting certain insurers.
During its inspection conducted from June 1 to June 5, 2020, IRDAI found that under the ‘ULIP’ (Unit Linked Insurance Plans) category, only five insurers were showcased on the platform despite the aggregator having agreements with several others. A similar pattern was observed in the health insurance segment, where 12 insurers were featured under the “Top plans” section, even though the platform had tie-ups with 23.
In addition to biased listings, the regulator raised serious concerns over the remittance of premiums. IRDAI’s investigation revealed systemic delays, as Policybazaar used its payment gateway and nodal account to collect premiums, requiring at least three working days for remittance.
Moreover, the order flagged governance lapses, including instances where Key Managerial Personnel (KMPs) held directorships in other companies without obtaining prior approval from the regulator—another breach of regulatory protocol. – News Agency