IRDAI Slaps ₹5 Crore Fine on Policybazaar for Multiple Violations

The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a record ₹5 crore penalty on Policybazaar, India’s leading online insurance aggregator, citing multiple serious violations discovered during a remote inspection in June 2020.

Key Violations Uncovered

The inspection revealed several regulatory breaches, including:

• Conflict of interest, with the principal officer and key managerial personnel holding unauthorised directorships in other companies.
• Promotion of select insurance products as "best" or "top" on the website without independent third-party verification.
• Irregular outsourcing payments.
• Failure to map telemarketing sales to authorised verifiers.
• Delays in premium remittance to insurers.

Each of these issues violates IRDAI’s corporate governance and fair business practice guidelines.

Conflict of Interest Draws ₹1 Crore Penalty

Policybazaar was fined ₹1 crore specifically for allowing its principal officer and other key managers to serve as directors in other firms without obtaining prior approval from the regulator. According to IRDAI, this posed a clear conflict of interest and undermined the independence of senior management.

Misleading Product Promotion Results in Another ₹1 Crore Fine

Another ₹1 crore fine was imposed on the company for labeling certain insurance products as "best" or "top" on its platform without using neutral, third-party data. IRDAI said this practice misled customers, gave preferential visibility to select insurers, and limited consumer choice.

Further Concerns and Caution Notices

IRDAI also flagged other concerns, such as:

• Excess commissions beyond permitted limits.
• Inadequate call recording systems, leading to poor traceability.
• Weak due diligence in appointing personnel holding insurance agency licenses.

Although these issues did not attract additional monetary penalties, formal cautions were issued, demanding corrective action.

Policybazaar Has 45 Days to Comply

Policybazaar has been given 45 days to remit the ₹5 crore fine, and it retains the right to appeal to the Securities Appellate Tribunal (SAT) if it wishes to contest the regulator’s findings.

Conclusion

This action by IRDAI marks one of the harshest penalties ever imposed on a digital insurance intermediary and serves as a warning to other players in the sector. As the digital insurance landscape grows, the regulator is stepping up scrutiny to ensure consumer protection, transparency, and corporate accountability remain central to business practices.

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