In a significant regulatory development, the Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of Rs 5 crore (Rs 50 million) on Policybazaar Insurance Brokers, a wholly-owned subsidiary of PB Fintech Ltd, for multiple violations of insurance rules. Alongside the penalty, the regulator issued fresh directives, advisories, and cautions, marking one of the sternest actions yet in India’s digital insurance distribution sector.
What Prompted the Penalty?
IRDAI's remote inspection and review process uncovered several breaches of the Insurance Act, 1938 and associated regulations. The violations pertained to:
Biased and misleading product promotions, where certain insurance products were labelled as 'top' or 'best' on Policybazaar’s online platform without robust, independent benchmarking.
Undue delays in remitting customer-paid insurance premiums to partner insurers, sometimes exceeding the 24-hour statutory timeline, with cases of delays ranging from five to over thirty days.
Inadequate mapping of policy sales to authorized verifiers during telemarketing, resulting in over 97,000 policies being listed without required authentication.
Key managerial personnel holding unauthorized directorships in external companies, posing potential conflicts of interest and governance risks.
Lapses in due diligence, excess commissions, and insufficient call recording and data maintenance protocols.
New Directions from the Regulator
Beyond the fine, IRDAI issued a suite of additional directions demanding Policybazaar:
Fully disclose product rankings and remove any misleading promotional content from its platform.
Remit insurance premiums to partners strictly within the 24-hour window mandated by law.
Accurately tag all policy sales to authorized verifiers and improve data traceability and transparency.
Submit detailed compliance reports and implement corrective governance and operational controls within tight deadlines.
The company was also cautioned that any future breach of norms may attract escalated penalties or even license restrictions.
Impact on Policybazaar and Sector-wide Signals
Policybazaar, long regarded as India’s leading digital insurance marketplace, has sold over 42 million policies since its inception in 2008. While the company transitioned from an insurance web aggregator to a full-fledged broker in early 2024, IRDAI’s order relates to practices observed during its tenure as an aggregator.
The Rs 5 crore penalty and strict remediation roadmap serve as a warning to all tech-based intermediaries to rigorously uphold transparency, unbiased product presentation, and prompt premium handling in consumer interest.
Industry watchers note that IRDAI’s action is designed to uphold customer trust and market integrity in the evolving insurtech landscape, and it underlines the regulator’s resolve to enforce fair play regardless of a player’s market status or innovation credentials.
Key Takeaways for Consumers and Investors
Customers are urged to pay close attention to product disclosures and unbiased comparisons on online insurance platforms.
Investors and shareholders in PB Fintech may see near-term volatility but are likely to focus on the company’s ability to swiftly comply and reinforce governance.
Source: IRDAI orders, Economic Times, Times of India, Business Standard and official PB Fintech disclosures
