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IRDAI Imposes ₹5 Crore Fine on PolicyBazaar for Regulatory Breaches and Misleading Promotions

Prime Highlights

  • PolicyBazaar penalized ₹5 crore by IRDAI for Insurance Act and Web Aggregator Rules violation.
  • Offenses range from partial product sales pitches to belated remittance of premium and governance lapses.

Key Fact

  • 11 serious regulatory violations were found during the inspection.
  • The organization was selling certain plans as “best” or “top” without possessing any defined or logical parameters.

Key Background

The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a ₹5 crore penalty on PolicyBazaar Insurance Brokers Pvt Ltd for a series of regulatory violations. The penalty follows a detailed investigation that uncovered 11 breaches under the Insurance Act, 1938, and IRDAI’s Web Aggregator Regulations of 2017.

One of the gravest follies was deceptive insurance product marketing. PolicyBazaar had placed certain life and health insurance products as “top” or “best,” giving rise to prejudiced customer opinion. These rankings were not on any explicit or objective criteria, contrary to convention to provide a fair list of products. This false representation has been regarded as being an immediate threat to consumer rights and market fairness.

Apart from product misrepresentation, the company postponed payment of paid premiums to insurers. Delay causes lacunas in coverage and is considered vital operating negligence. Specifically for this delay in premium transfer, one crore of the penalty amount is withheld. IRDAI requires aggregators to make premium transfers on time so that there is continuity to policies and protection of consumers.

Governing lapses also played a role in the case. Certain of PolicyBazaar’s senior managerial personnel were acting as directors of other organizations without preinforming the regulator, which raised flags over conflict of interests. Procedural lapses in outsourcing and call monitoring systems also existed. Telemarketing-related policies weren’t mapped effectively against approved verifiers, evading regulatory provisions regarding transparency and verification.

IRDAI enforcement action encompasses advisories and directions and monetary penalties that serve to make compliance and consumer confidence stronger. The initiative sends a clear message to online insurance platforms regarding the importance of following guideline rules, fair trade practices, and consumer disclosure.