“IRDAI in exercise of the powers under Section 102 of the Insurance Act, 1938, has imposed a penalty of Rs. Five 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 Insurance Act, 1938, ”said a IRDAI order running into 34 pages signed by Satyajit Tripathy, member, Distribution and PK Arora, member, Actuary.

Hyderabad: Insurance regulator IRDAI on Monday has imposed a fine of Rs 5 crore, the largest ever penalty on any insurance player, on Policybazaar Insurance Brokers, a subsidiary of listed PB Fintech, for violating existing regulations on multiple counts including norms pertaining to Directorships held by Key Managerial Personnel (KMPs) and principal officer (PO), product display, Outsourcing Agreements, tagging of policies and premium remittance.

IRDAI in exercise of the powers under Section 102 of the Insurance Act, 1938, has imposed a penalty of Rs. Five 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 Insurance Act, 1938,” said a IRDAI order running into 34 pages signed by Satyajit Tripathy, member, Distribution and PK Arora, member, Actuary.

Policybazaar received a Show Cause Notice dated October 07, 2024, providing an opportunity for personal hearing and additional submissions. After considering the additional submissions and personal hearing, IRDAI issued an order dated August 04, 2025, levying a penalty in aggregate of Rs 5 crores for violation of provisions of applicable IRDAI Regulations with respect to certain aspects pertaining to Directorships held by Key Managerial Personnel (KMPs) and principal officer (PO), product display, Outsourcing Agreements, tagging of policies and premium remittance, said PB Fintech, the parent company of Policybazaar, in a disclosure to exchages.

IRDAI has also issued additional directions/advisory to the Company and advised to comply with those directions/advisory in a time‐bound manner, added PB Fintech.

The IRDAI had conducted the remote inspection of insurance web aggregator (IWA ) from 1st to 5th June 2020. The inspection report revealed multiple violations of provisions of the Insurance Act, 1938, for which the regulator has slapped 11 charges against the listed intermediary.

One of the charges is key managerial personnel (KMPs) and employees of the web aggregator are having directorships in other companies. The principal officer (PO) of the IWA had held directorship in a few companies, in addition to having directorship in IWA. In addition, it is also observed that President, Head of Operations, Director General Insurance Business and BU Head were holding the position of the directorship in other entities, said the IRDAI.

Policybazaar apologized for not taking the prior approval of the IRDAI . Post Personal hearing with the IRDAI, the company submitted that current Principal Officer and Key Managerial Personnel (KMPs) are not holding directorship in any other company

The IWA regulations require that the domain names of primary or secondary or product category specific websites are owned and registered in the name of IWA. However, it is noticed that the website of policybazaar.com is owned by its holding company. IWA has paid license fee @ 5% of the revenue to the holding company for usage of domain name, revealed IRDAI inspection report.

During FYs 2018-19 and 2019-20, a sum of Rs 15.51 crore and Rs 25.79 crore respectively has been paid to the holding company.

IRDAI report detected that clientele of paisabazaar.com are diverted to policy bazaar. While browsing the website of Paisabazaar.com, a website operated by its group company M/s Paisabazaar Marketing and Consulting Private Limited (paisabazaar.com), it is noticed from the homepage of Paisabazaar.com, that there is a provision for diverting their clientele for life and health insurance needs to Policybazaar’s website.

Though, this requires the approval of the IRDAI for diversion of clientele, Policybazaar has not sought any approval of the IRDAI. .

The digital intermediary while entering into agreement with HDFC Life for providing outsourcing, has agreed the price on per service basis. Policybazaar has received a sum of Rs. 104.59 crore towards outsourcing charges in the year 2019-20. In one invoice, it has charge a sum of Rs. 24.81 crore towards cost of work station for the month of March, 2020.

During the personal hearing with the insurance regulator, the company submitted that for all the outsourcing arrangements are done on the basis of legal agreements, charges are predetermined and for the post-sale activities only. As majority of the policies sold by them are monthly mode policies which require a lot of servicing at their end.

Post personal hearing, the company submitted that currently, all the outsourcing arrangements have been stopped Further, on examination of the documents submitted by the company, it is concluded that the company’s submissions with regard to owning of domain name/website policybazaar.com are not found true, said IRDAI’s order.

On the examination of the financial statement for the FY 2018-19, it has been observed that Policybazaar is sharing the Infrastructure and other cost with its holding company without having a valid agreement

Further, the insurance intermediaries are required to remit the insurance premium within 24 hours of the receipt of the premium but not complied by Policybazaar.

Despites of reminder, the company failed to provide call recoding even for a single case. This indicate that the systems are not administratively capable to extract solicitation related documents for policies sold to demonstrate the process.

There is a concern that the intermediary could be indulging in sourcing of business through call centers by way of misleading calls. There may be issues of mis-selling however, the same couldn’t be verified by the inspection team as they could not get access to the data, said the IRDAI.

The inability to provide the data within turn-around-time is a matter of concern from suitability point of view and from the stand-point of treating customers fairly, commented the IRDAI..

Also, the company has received the insurance commission in excess of the remuneration prescribed under the commission regulations.