Irdai imposes ₹5 crore penalty on Policybazaar for violating norms

The Insurance Regulatory & Development Authority of India (IRDAI) on Monday imposed a penalty of Rs 5 crore on Policybazaar Insurance Brokers for multiple violations.

 

“Irdai, in exercise of the powers under Section 102 of the Insurance Act, 1938, has imposed a penalty of Rs 5 crore on M/s Policybazaar Web Aggregator Pvt. Ltd. (now known as 'M/s Policybazaar Insurance Brokers Pvt. Ltd.') along with Direction, Advisory, and Caution for various violations established under the Insurance Act, 1938 and Rules and Regulations made thereunder,” IRDAI said in its press release.

 

According to IRDAI, apart from regulatory breaches such as KMPs (Key Managerial Personnel) holding directorships in other companies without prior approval from the insurance regulator, Policybazaar was also found guilty of promoting products in a biased manner and ranking various insurance products as top or best without “making available any material to the prospects to make an informed choice.”

 

 

As per the order, the aggregator’s website displayed only details of ULIP products from five insurance companies, while the Insurance Web Aggregator (IWA) had agreements with other life insurance companies offering ULIPs. Similarly, under the “Health” section, there was mention of “Top plans-health insurance” from 12 insurers in a particular sequence (rating). Although the IWA had agreements with 23 insurers, it only named some products of about 12 insurers as ‘Top plans’.

 

 

The order noted that at the time of inspection (1st to 5th June 2020), the top five ULIP plans displayed on the site were Bajaj Allianz Goal Assure, Edelweiss Tokyo Wealth Gain+, HDFC Click2 Wealth, SBI Life e-wealth Insurance, and ICICI Signature.

 

“By showing certain insurance products of some insurers as 'Best' or 'Top plans', it has led to the creation of preference and promotion of these insurers and their specific plans only,” the regulator added. Moreover, there were no clear grounds on which these products were marketed as the best or top in their category.

 

The insurance regulator also noted delays in remitting insurance premiums to the insurer. IRDAI’s order highlighted that Policybazaar mostly used its own payment gateway and its own nodal account for collecting premiums, with a minimum of three working days required to remit such insurance premiums.

 

Upon examining a selection of 67 insurance policies, IRDAI found that premiums were remitted with delays exceeding 30 days. Additionally, for 8,971 sample insurance policies, delays in remittance ranged from 5 to 24 days. For another set of around 77,033 policies, premiums were remitted after 3 working days, according to the order.