Mumbai: IRDAI Imposes Heavy Penalty on Policybazaar

In a significant move, the Insurance Regulatory and Development Authority of India (IRDAI) has slapped a hefty fine of Rs 5 crore on Policybazaar. This penalty comes after a remote inspection in June 2020 uncovered several violations, marking a record in regulatory actions against insurance platforms.

Key Violations Identified

Conflict of Interest: Policybazaar was fined Rs 1 crore for allowing its principal officer and key managerial personnel to hold directorships in other firms without prior approval, creating a potential conflict of interest.

Biased Product Promotion: Another Rs 1 crore penalty was imposed for promoting select insurance products as "best" or "top" on its website without independent third-party data, misleading consumers and favoring certain insurers.

Additional Concerns and Next Steps

The regulator also highlighted issues with excess commissions, inadequate call recording systems, and insufficient due diligence on staff with insurance agency licenses. Policybazaar has been given 45 days to pay the fine, with the option to appeal to the Securities Appellate Tribunal.