Policybazaar Hit with ₹5 Crore Penalty for Violating Insurance Norms
The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a hefty penalty of ₹5 crore on Policybazaar Insurance Brokers Pvt Ltd, citing multiple violations under the Insurance Act, 1938, and the IRDAI (Insurance Web Aggregators) Regulations, 2017. The regulatory order, dated August 4, 2025, also includes a direction, advisory, and caution issued to the company.
The violations stem from 11 separate charges, ranging from governance failures to improper promotion of insurance products, during the period when Policybazaar operated as an Insurance Web Aggregator (IWA) before securing its composite broker license in February 2024.
Biased Product Rankings Lacked Transparency
One of the primary breaches highlighted by IRDAI was the display of product rankings on Policybazaar’s platform without providing adequate disclosures. The company promoted several insurance products as “top” or “best” without presenting the criteria behind such rankings, thereby misleading prospective buyers.
During an IRDAI inspection conducted from June 1 to 5, 2020, the regulator observed that the top five ULIP products displayed on Policybazaar’s website included:
- Bajaj Allianz Goal Assure
- Edelweiss Tokyo Wealth Gain+
- HDFC Click2Wealth
- SBI Life e-Wealth Insurance
- ICICI Signature
However, the platform failed to provide any transparent methodology or disclaimers explaining these rankings, which the regulator deemed biased and lacking substantiation.
Governance Violations and Premium Remittance Delays
Apart from product promotion lapses, the IRDAI also pointed out governance violations, including instances where Key Managerial Personnel (KMPs) of Policybazaar held directorships in other companies without seeking prior IRDAI approval, a direct violation of regulatory norms.
Additionally, Policybazaar was penalized ₹1 crore for delays in remitting insurance premiums to insurers. The inspection revealed that Policybazaar routed premium collections through its own nodal account and proprietary payment gateway, taking at least three working days to transfer funds to insurers. This practice is in contravention of Section 64VB of the Insurance Act, which mandates that intermediaries remit premiums to insurers within 24 hours of receipt.
PB Fintech Confirms Regulatory Action
In response, PB Fintech Ltd, the parent company of Policybazaar, acknowledged the IRDAI’s regulatory action in a filing to the stock exchange. The company stated:
“The Authority has levied a penalty of ₹5 crore, vide its Order dated August 4, 2025, on Policybazaar, a wholly owned subsidiary of PB Fintech Limited. The matter will be placed before the Board of Directors in the upcoming meeting.”
PB Fintech further mentioned that it would submit an Action Taken Report to IRDAI as per the directive.
Market Reaction: PB Fintech Shares Dip
Following the announcement, PB Fintech’s shares declined by 1.8%, trading at ₹1,750.10 on the Bombay Stock Exchange (BSE) at around 9:40 am. Market participants attribute the dip to investor concerns regarding regulatory compliance and potential operational adjustments the company may need to undertake.
Final Word
The IRDAI’s enforcement action against Policybazaar underscores the growing regulatory scrutiny in the insurance web aggregation space. The penalty serves as a reminder to digital platforms and intermediaries to maintain transparent disclosure practices, adhere strictly to premium remittance rules, and ensure good governance standards.
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