Why Policybazaar Was Penalised Rs.5 Crore by IRDAI – Full Details Inside

In a significant regulatory action, the Insurance Regulatory and Development Authority of India (IRDAI) has imposed a fine of Rs.5 crore on Policybazaar Insurance Brokers Pvt Ltd, citing multiple violations of the Insurance Act, 1938, and IRDAI’s Web Aggregators Regulations, 2017. Alongside the fine, the watchdog also issued a formal direction, advisory, and caution notice to the company.

Also Read: Market crashes due to Trump's tariff, investors suffer huge losses

11 Charges Explained

The regulator’s official order, dated August 4, 2025, details 11 distinct violations. These range from lapses in corporate governance to unfair marketing of insurance products. All these violations were found during the period when Policybazaar operated as an Insurance Web Aggregator, prior to its upgrade to a composite broker licence in February 2024.

Misleading Product Rankings

One of the major concerns raised by the IRDAI was that Policybazaar promoted certain insurance products as “top” or “best”, without offering any transparent criteria or valid data to support those claims. This marketing style was flagged as biased and potentially misleading to consumers.

ULIP Product Inspection

An inspection conducted between June 1 and 5, 2020, revealed that Policybazaar showcased five Unit Linked Insurance Plans (ULIPs) as the top offerings—products from Bajaj Allianz, Edelweiss Tokyo, HDFC Life, SBI Life, and ICICI Prudential were listed. However, the IRDAI noted a lack of disclaimers or methodology explaining how these rankings were determined.

Governance and KMP Violations

The order also revealed governance lapses, including key managerial personnel (KMPs) serving as directors in other companies without prior regulatory approval. This breach contradicts the compliance standards expected from licensed insurance intermediaries.

Delayed Premium Remittance

Policybazaar also faced a Rs.1 crore penalty for delays in remitting customer premiums to insurers. The IRDAI found that premiums were routed through Policybazaar’s nodal account and proprietary payment gateway, taking over three working days for transfers. As per Section 64VB of the Insurance Act, such funds must be transferred to insurers within 24 hours—a rule clearly violated.

Parent Company Responds

PB Fintech Ltd, the parent company of Policybazaar, acknowledged the IRDAI’s order in a stock exchange filing. The company confirmed that the issue would be discussed at its next board meeting and an action taken report would be submitted to the regulator as required.

Stock Market Impact

Following the news, shares of PB Fintech dipped by 1.8%, trading at Rs.1,750.10 on the Bombay Stock Exchange as of 9:40 AM on the day of the announcement.

Also Read: Now Trump has burst a 50% 'Tariff Bomb', which way will the market turn?