IRDAI Imposes Penalty Of 1.11 Crore On Policy Bazaar For Non-Compliance Of Regulations
The Insurance Regulatory Development Authority of India (IRDAI) has fined Policy Bazaar Insurance Web Aggregator (Policy Bazaar) with a penalty of 1.11 crore for violating regulations of the IRDA (Insurance Web Aggregators) Regulations, 2013 (IRDA Regulations). Out of the eight charges levelled against it, Policy Bazaar was found guilty of four charges and was advised by IRDAI to be careful as regards the other four charges.
The issue arose out of an advertisement titled as 'Navratra Offer' being displayed on the website of Policy Bazaar under which certain monetary incentives in the guise of complementary benefits were being offered to its prospective customers.
The charges for which Policy Bazaar was penalised, are as follows:
As Policy Bazaar had entered into an agreement with 'lndian Health Organization by Aetna' (IHO), which is not an insurer's product, the Regulatory authority found it guilty of violating Regulation 3(a)(iii) of IRDA Regulations, which states that a web aggregator cannot engage in any business other than the business of web aggregation of insurance.
It was observed that Policy Bazaar had displayed the services offered by IHO on its website and therefore violated Regulation 11(b)(ii) of IRDA Regulations. Regulation 11(b)(ii) prohibits the web aggregator from displaying advertisement pertaining to any product or service, including insurance product or insurance services of financial products etc.
It was observed that Policy Bazaar displayed benefit scheme offered by IHO as an inducement to the prospective customers. Furthermore, the customer benefit facilitation letter established that Policy Bazaar had shared the personal information of the customers with IHO, thus violating Regulation 14(b) and Clause (a) (iii) of Schedule VII of IRDA Regulations.
As per Regulation 14(b) the web aggregator has to share the data in the lead management system (LMS) with the insurance companies with whom they signed agreement for the web aggregation of insurance products. Sub clause (a) of clause iii of 'Schedule VII' provides that all the information provided by customers are to be kept completely confidential to themselves and to the insurer to whom the business is being offered.
Policy Bazaar admitted that the display of "Navratra Offer" on their website was an inadvertent mistake and had also not filed a copy of the advertisement as soon as it was first issued. Thus, by not filing the advertisement with the Authority as soon as it was first issued is in violation of the Regulation (3)(v) "Compliance and Control" of IRDA (lnsurance Advertisements and Disclosure) Regulations, 2000.
As per Regulation 3(1)(v) of IRDA (lnsurance Advertisements and Disclosure) Regulations, 2000, the web aggregator has to file a copy of each advertisement with the Authority as soon as it's issued.
IRDAI was of the opinion that Policy Bazaar being the leader in the online web aggregation space, has the tremendous responsibility and was expected to act diligently and with utmost care and responsibility.
The Authority concluded that Policy Bazaar is guilty of four charges and was directed to pay a penalty of Rs. 1.11 cr. However, IRDAI also observed that if aggrieved by the above decision, it was free to file an appeal before the Securities Appellate Tribunal as per Section 110 of the Insurance Act, 1938.