New Delhi [India], August 5 : The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of Rs 5 crore on Policybazaar Insurance Brokers for multiple violations of the Insurance Act, 1938 and related rules and regulations.
In an official statement, the IRDAI said that the action was taken under Section 102 of the Insurance Act, 1938.
It stated, "IRDAI in exercise of the powers under Section 102 of the Insurance Act, 1938, has imposed a penalty of Rs. Five Crore on M/s Policybazaar Web Aggregator Pvt. Ltd. (Now known as "M/s Policybazaar Insurance Brokers Pvt. Ltd.")"
The penalty was imposed after the regulator examined 12 charges related to Policybazaar's operations. One of the key violations pertained to Key Managerial Personnel (KMPs) holding directorships in other companies, which goes against exclusivity norms.
Policybazaar had argued that disclosure was not required unless the other roles were in the insurance sector. However, IRDAI disagreed, citing potential conflict-of-interest risks and imposed a penalty of Rs 1 crore for this violation.
Another violation involved the promotion of certain insurance products on the Policybazaar website as "TOP" or "BEST," which is against the guidelines that mandate neutral and unbiased listings.
Though the company later corrected the issue, the IRDAI imposed another Rs 1 crore penalty for attempting to influence consumer choices.
Policybazaar was also found to have received hundreds of crores from insurers for outsourced services without maintaining clear agreements that defined service-level details or provided a transparent pricing structure. IRDAI considered this non-transparent and imposed another Rs 1 crore fine.
In the area of telemarketing, the company lacked proper tagging of Authorized Verifiers (AVs). Though improvements were made later, the violation led to a additional penalty of Rs 1 crore.
Another major issue was the use of Policybazaar's own payment gateway and nodal accounts to collect premiums from customers. In several cases, the remittance to insurers was delayed by more than 30 days, breaching the 24-hour rule. This violation also attracted a Rs 1 crore penalty.
Policybazaar was also unable to provide call recordings when requested, citing challenges in retrieval. While no fine was imposed for this, IRDAI directed the company to undergo an external audit by Chartered Accountant.
The regulator also found instances of commission payouts exceeding the prescribed limits, which it attributed to delays in reconciliation. A formal caution was issued on this matter.
Moreover, several Authorized Verifiers were also found to be acting as insurance agents, a clear compliance failure. IRDAI issued a caution and directed the company to implement stronger verification and compliance measures.
When theteam tried contacting Policybazaar to comment on this matter, the insurance platform declined to comment.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor