IRDAI Slaps INR 5 Cr Fine On Policybazaar For Flouting Norms

The Insurance Regulatory and Development Authority of India (IRDAI) has slapped a fine of INR 5 Cr on insurtech major PolicyBazaar for multiple violations of insurance norms. 

The penalty follows a remote inspection carried out by the regulator in June 2020, with the final order issued on August 4 this year. 

According to the order, Policybazaar Insurance Brokers failed to disclose that several of its key managerial personnel, including its former principal officer, held directorships in other companies. 

This non-disclosure was in breach of regulations, which require insurance web aggregators to inform the regulator of any material changes in their leadership structure. 

The regulator also flagged issues with Policybazaar’s website content, which displayed selected insurance plans as “Top” or “Best” without a clear basis, thereby potentially influencing consumer choice in an unfair manner. 

IRDAI said that such promotions mislead customers and are not permitted unless based on factual, third-party data, which was not provided.

The IRDAI order also outlined the violations related to lack of clarity in outsourcing agreements with insurers. As per the order, Policybazaar received large sums from insurance companies for outsourcing services, but many agreements lacked basic information such as the scope of services and justification for the fees charged. 

The regulator said that payments were often made on a “per seat” basis, without any link to the actual services performed. This, IRDAI said, raised questions about transparency and fairness. 

Another serious concern was the poor state of internal record-keeping. The company is said to have failed to tag thousands of policies to the authorised verifiers, responsible for selling them. 

IRDAI said that Policybazaar, despite repeated requests, was unable to produce call recordings or necessary documentation to confirm if proper processes were followed during the sale of these policies.

IRDAI also found that the company had delayed transferring insurance premiums collected from customers to the respective insurers. Premiums were routed through Policybazaar’s own payment gateway and nodal account, and in several cases, the money was not transferred within the mandatory 24-hour period.

In a sample set of policies, IRDAI observed delays of over 30 days. This, the regulator said, poses a systemic risk and violates the core principle that insurers can only assume risk after receiving the premium in full and in time.

In total, six charges led to financial penalties of INR 1 Cr each, while five others resulted in warnings, advisories, or directions for corrective action. Policybazaar has been directed to present the order to its board in the next meeting and submit an action taken report within 90 days.

This comes a few days after Policybazaar’s parent PB Fintech reported a consolidated profit after tax (PAT) of INR 84.7 Cr in Q1 FY26, up 41% from INR 60 Cr in the year-ago quarter. This came largely on the back of an exceptional gain of INR 41.1 Cr during the quarter. 

Meanwhile, operating revenue rose 34% YoY to INR 1,348 Cr in Q1 FY26.