India’s insurance watchdog has cracked the whip on one of the country’s most prominent digital brokers. On August 4, 2025, the Insurance Regulatory and Development Authority of India (IRDAI) imposed a ₹5 crore penalty on Policybazaar Insurance Brokers Pvt. Ltd., citing 11 violations of insurance laws and regulations.
The order, which followed a detailed audit, raises serious concerns about how insurance is being sold online — from biased product recommendations to delays in premium remittance.
Key Violations Noted by IRDAI
1. Misleading Insurance Rankings
Policybazaar showcased some insurers’ ULIPs and health plans as “Top” or “Best” — without disclosing why or how. IRDAI found that the rankings didn’t include other insurers that had active partnerships with Policybazaar, thereby misguiding policyholders.
“There was no verifiable methodology for plan rankings. Use of words like ‘Best’ is misleading without third-party assessment,” IRDAI noted in its official order.
Source: IRDAI Order via Economic Times
2. Premium Transfer Delays
Despite collecting premiums from users, Policybazaar was found not transferring them to insurers within the mandated 24-hour window. Some cases had delays of over 30 days, risking delayed policy activation or claim rejection.
3. Conflict of Interest Not Disclosed
Several top executives held positions in other companies — a potential governance breach. These roles weren’t declared to IRDAI, violating the Code of Conduct for Brokers.
4. Outsourcing Irregularities
Policybazaar had signed vague “per seat” service contracts with unclear costs and deliverables. This made it hard to verify if insurers were being overcharged or if commissions breached IRDAI caps.
5. Missing Tele-Sales Data
Over 97,000 policies sold by telemarketing agents had no mapped records to authorized verifiers (AVs), violating audit requirements. IRDAI noted missing call recordings and verification gaps.
Breakdown of IRDAI’s ₹5 Crore Fine on Policybazaar
| Biased promotions | ₹1 crore |
| Delayed remittance | ₹1 crore |
| Conflict of interest | ₹1 crore |
| Outsourcing contracts | ₹1 crore |
| Record-keeping failure | ₹1 crore |
IRDAI in exercise of the powers under Section 102 of the Insurance Act, 1938, has
imposed a penalty of Rs. Five Crore on M/s Policybazaar Web Aggregator Pvt. Ltd.
(Now known as “M/s Policybazaar Insurance Brokers Pvt. Ltd.”) along with Direction,
Advisory and Caution for various violations established under Insurance Act, 1938 and
Rules and Regulations made thereunder.
Source: IRDAI
Why Indian Insurance Buyers Should Care
Millions of Indians turn to Policybazaar and similar digital brokers to compare and purchase insurance plans. This ruling raises three major red flags for everyday users:
- The “Top Plan” might be based on promotion, not merit.
- Your policy could be inactive if premiums are delayed.
- Poor internal checks mean you could be mis-sold a policy — and there may be no proof of it.
IRDAI’s Message to the Industry
This penalty isn’t just about one company — it’s a strong warning to all aggregators and brokers. The IRDAI is demanding:
- Transparency in promotions
- Faster premium settlement
- Cleaner outsourcing practices
- Accountability in sales records
“The insurance intermediary ecosystem must act in utmost good faith and provide unbiased product information,” the IRDAI stated.
Source: IRDAI Official Release via Business Standard
What You Can Do as a Policyholder
If you’re buying insurance online, here’s how to stay safe:
- Don’t blindly trust “Top Plan” tags — compare benefits on the insurer’s own site.
- Always check for instant policy confirmation by the insurer, not just by the aggregator.
- Save your call recordings, policy PDFs, payment slips, and SMS/email confirmations.
- You can file complaints directly at: Bima Bharosa Portal (IRDAI)
As more Indians rely on digital platforms to buy insurance, this IRDAI order is a powerful reminder — always double-check what’s being sold to you as “best.” Because in insurance, trust is everything — and transparency is no longer optional.
