What Happened Between IRDAI and Policybazaar?
IRDAI Fines Policybazaar ₹5 Crore: In a major development that has sent ripples through India’s insurance industry, the Insurance Regulatory and Development Authority of India (IRDAI) has fined Policybazaar Insurance Brokers Pvt Ltd a whopping ₹5 crore.
But why such a steep penalty? It’s not just one mistake—it’s a series of serious violations that raised red flags during a regulatory inspection.
What Did Policybazaar Do Wrong?
According to IRDAI’s official order dated August 4, 2025, 11 charges were leveled against the company. These included issues with transparency, governance, and delay in financial practices.
Here’s a simplified breakdown of the top 3 violations that led to the hefty fine:
1. Misleading Insurance Product Rankings
Policybazaar allegedly ranked certain insurance products as “Top” or “Best”—but without disclosing how those rankings were determined. This lack of transparency could mislead customers into buying products based on biased or paid promotions.
Example:
An IRDAI inspection (June 2020) revealed that ULIP products from companies like HDFC, SBI Life, ICICI, and others were promoted as top-ranked, but the site didn’t explain why or how these were selected.
2. Delay in Premium Remittances
Policybazaar was also fined ₹1 crore for not transferring insurance premiums to insurers on time. Instead of the required 24 hours, they took up to three working days, routing payments through their own nodal account and payment gateway.
This directly violates Section 64VB of the Insurance Act, 1938, which ensures timely premium transfers to safeguard policyholder interests.
3. ⚖️ Corporate Governance Failures
The IRDAI found that senior Policybazaar executives (KMPs) were holding directorships in other companies—without getting prior approval from the authority. This lack of corporate discipline breaches key regulatory norms.
💼 What’s Next for Policybazaar?
Policybazaar’s parent company, PB Fintech Ltd, acknowledged the penalty in a stock exchange filing and confirmed that it would present the issue to its board.
They’re also required to submit an Action Taken Report to the IRDAI, outlining how they plan to fix the violations.
Notably, Policybazaar transitioned from an Insurance Web Aggregator (IWA) to a composite broker in February 2024, but these violations date back to its IWA operations.
Market Impact:
Following the news, PB Fintech’s shares dropped 1.8% on the Bombay Stock Exchange, reflecting investor concern over regulatory compliance.
How Does This Affect Policyholders?
For customers, this incident is a wake-up call. Many rely heavily on digital platforms for insurance advice. However, blindly trusting rankings or promotions can be risky.
This case highlights the importance of:
Doing your own research
Reading disclaimers
Comparing products directly from insurers when possible
IRDAI’s action reinforces that intermediaries must act in policyholders’ best interests, not just push products for profit.
🛡️ What Role Does IRDAI Play in All This?
The IRDAI is the central authority overseeing India’s insurance sector. Its mission is to:
Protect policyholders
Regulate market practices
Ensure fair play among insurers and brokers
This penalty shows IRDAI’s zero-tolerance policy when it comes to regulatory violations. The goal is to maintain public trust in the insurance ecosystem.
📌 Quick Summary: Why Policybazaar Was Fined ₹5 Crore
| Violation | Details |
|---|---|
| Misleading Product Rankings | Promoted “top” insurance products without transparency |
| Delayed Premium Transfers | Took up to 3 days to remit premiums instead of the mandated 24 hours |
| Governance Issues | KMPs held external directorships without IRDAI approval |
Lessons for the Industry
The Policybazaar penalty serves as a strong reminder for all digital insurance platforms: Regulatory compliance isn’t optional—it’s essential.
For users, it’s a prompt to stay informed, ask questions, and never rely solely on flashy marketing tags like “top-rated” or “best plans”.
As the insurance industry grows more digitized, transparency and trust must remain top priorities—for platforms, insurers, and policyholders alike.
