Irdai Imposes Rs. 5 Crore Penalty on Policybazaar for Violation of Rules

• 06 Aug 2025
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On 4 August 2025, the Insurance Regulatory & Development Authority of India (IRDAI) imposed a penalty on Policybazaar Insurance Brokers for committing multiple violations. The penalty for the violations amounts to Rs. 5 crore.

The insurance regulator, in its press release, stated, “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.”

According to IRDAI, the Policybazaar has been found guilty of several regulatory violations. These include allowing key managerial personnel to hold directorships in other companies without the prior approval of the insurance regulator. Additionally, the company has been accused of promoting insurance products in a biased manner, ranking various products as top/best without providing sufficient information to allow consumers to make informed choices. 

Policybazaar's website only featured details about Unit Linked Insurance Plans from five insurance companies, despite having agreements with other life insurers that also offer them. In the Health section, Policybazaar had listed "Top health insurance plans" from 12 insurers in a specific ranking order. However, since the Insurance Web Aggregator (IWA) had agreements with a total of 23 insurers, only some of the products from these 12 insurers were named as "Top plans."

IRDAI’s order noted that, during the inspection from 1st to 5th June in 2020, the top 5 ULIPs on the site were the following: (i) Bajaj Allianz Goal Assure, (ii) Edelweiss Tokyo Wealth Gain+, (iii) HDFC Click2 Wealth, (iv) SBI Life e-wealth Insurance and (v) ICICI Signature.

The insurance regulator further said, “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.” Additionally, these products were promoted as best/top in their category without any clear grounds.

Delays in remitting insurance premiums to the insurer were also observed by the IRDAI. The regulator’s order outlined that Policybazaar mostly used its own payment gateway and own nodal account for the purpose of collection of premiums. It took a minimum of three working days for remitting these premiums.

IRDAI, upon reviewing a selection of 67 insurance policies, discovered that premiums were remitted with delays that exceeded 30 days. In addition to this, delays in remittance ranged from 5 days to 24 days for a total of 8,971 sample insurance policies. Premiums were remitted after 3 working days for another set of about 77,033 insurance policies, as per the order of the insurance regulator.

Source: Business Standard