IRDAI penalizes Policybazaar Rs 5 crore for various violations including biased and misleading product promotions
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Insurance watchdog IRDAI has penalised Policybazaar with a total of Rs 5 crore on accounting of violating 11 charges under various provisions of the Insurance Act and IRDAI (Insurance Web Aggregators) Regulations, 2017.Apart from regulatory breaches like KMPs (key managerial personnel) holding directorships in other companies without prior IRDAI approval, Policybazaar was found guilty of promoting products in a biased manner, and ranking various insurance products are top or best without 'making available any material to the prospects to make an informed choice', as per the IRDAI order.In addition to this, Policybazaar, or Policybazaar Insurance Web Aggregator Pvt. Ltd, referred to as IWA in the order, was fined Rs 1 crore for delaying the remittance of premiums paid by policyholders to the concerned insurers. Read on to know more.According to the order, on the IWA website, at the time of inspection (1st to 5th June 2020), the top 5 ULIP plans displayed on the site were Bajaj Allianz Goal Assure, Edelweiss Tokyo Wealth Gain+, HDFC Click2 Wealth, SBI Life e-wealth Insurance and ICICI Signature.'The IWA website displayed only details of ULIP products of 5 insurance companies, while the IWA had agreements with other life insurance companies that offer ULIPs. Similarly, under 'Health section', there was mention of 'Top plans-health insurance' from 12 insurers in a particular sequence (rating). In the same way, there are 23 insurers having agreements with the IWA; however, the IWA had named some products of about 12 insurers as 'Top plans''By showing some particular 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', it added. Moreover, there were no clear grounds on which these products were marketed as the best / top in their category.IRDAI rules stipulate that an IWA shall not rank or compare the products in a manner that seeks to promote one insurer over the other. 'Words like 'best', 'top', or 'No. 1' are not allowed unless based on verified, factual, third-party data disclosed transparently and within the ambit of the regulations. Endorsing one insurer or set of insurers over the others leads to scanty choice for the customer to select the products. It also gives rise to a non-transparent manner of displaying the products', the order continued.The IRDAI order also highlighted that Policybazaar was mostly using its own payment gateway and its own nodal Account for collecting the premium, with its minimum working days required to remit such insurance premium standing at 3 working days. This violates Section 64VB of the Insurance Act, 1938, which states that insurance intermediaries are required to remit the insurance premium within 24 hours of the receipt of the premium.On the examination of the selected 67 insurance policies, a delay was noticed in the remittance of insurance premiums, exceeded by more than 30 days. Further, for 8971 sample insurance policies, the delay in the remittance of insurance premiums ranged from 5 days to 24 days. Further, for another set of around 77033 policies, the premium has been remitted after 3 working days', noted the order.Policybazaar also sold over 97,000 policies without mapping each policy to an AV (Authorised Verifier). Rules note that the policy-wise details of policies sold via 'Telemarketing mode' should have been tagged by Authorised Verifiers. However, 97,780 policy records were mapped as 'unassisted' or 'unmapped' out of a total of 4,32,366 policies sold through Telemarketing Mode. A lack of such record keeping meant no one could ascertain who concluded the sale of each of these policies.IRDAI (Insurance Web Aggregators) Regulations make it mandatory for the IWA to maintain policy-wise and AV-wise details, wherein each policy solicited by the IWA is tagged to the AV. IWA Regulations also cast an obligation on IWA to maintain data in such a way that the Authority can have regular and timely access to it.
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