Acko Fined ₹1 Crore by IRDAI: What It Means for Your Insurance Policy

India’s insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), has slapped a ₹1 crore penalty on Acko General Insurance for regulatory violations, particularly in its dealings with Ola Financial Services (OFSPL). The violations centered around unapproved commission practices masked as marketing and API service fees actions that breach several provisions under the Insurance Act, 1938.

But the big question for policyholders is: Will your Acko policy be affected by this regulatory penalty?

What This Means for Your Acko Insurance Policy

As per news reports, experts assert that the IRDAI’s order is primarily concerned with compliance and operational lapses not the validity of customer insurance policies. So, if you bought a policy from Acko or via Ola’s platform, you can breathe easy. Your policy remains valid and enforceable.

As per news reports, legal experts confirm that there’s no clause in the order indicating any threat to the existing policies. Policyholders will still be entitled to file claims and receive benefits as per the terms outlined in their insurance contracts.

The Core Issue: Unauthorised Intermediaries

Between FY 2018-19 and January 2021, Ola Financial Services was not a licensed insurance intermediary or corporate agent. Despite this, Acko engaged with OFSPL for policy sales, under the guise of payments for advertisement and API services. This is a clear breach of regulatory guidelines that require any entity selling insurance to be registered with IRDAI.

Using unregistered intermediaries can pose serious risks to consumers, including:

• Mis-selling: Agents may not have undergone proper training or adhere to regulatory ethics.
• Lack of accountability: If issues arise, customers have limited recourse.
• Data security risks: Unregistered parties are not bound by IRDAI’s data protection norms.

How to Protect Yourself

Consumers must verify whether the person or platform selling them an insurance policy is legally authorised. IRDAI offers a public registry of licensed agents and intermediaries on its official website. Here are a few tips to stay safe:

• Ask for the IRDAI registration number.
• Confirm whether the seller is listed as a corporate agent, broker, or aggregator.
• Double-check digital platforms claiming to sell insurance.
• When in doubt, contact the insurer directly.

Need for Vigilance in Insurance Sales

While the ₹1 crore fine against Acko raises concerns about backend compliance and ethical practices, current policyholders are not at risk. However, this incident is a timely reminder to always check the credentials of those selling insurance. As fintech and insurance tech platforms continue to grow, ensuring regulatory compliance will be crucial to protect consumer interests and industry integrity.

Read More: Beware: That Fancy Hospital Room May Cut Your Health Insurance Coverage By 50%.

Conclusion

This case underscores the critical importance of verifying the credentials of insurance intermediaries to avoid potential risks associated with unregistered agents. As digital insurance platforms expand rapidly, consumers must stay vigilant and demand transparency and compliance to safeguard their interests and maintain trust in the insurance ecosystem.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.