For many infractions of insurance regulations, insurtech giant Policybazaar was fined INR 5 Cr by the Insurance Regulatory and Development Authority of India (IRDAI). The infractions pertaining to unclear outsourcing contracts with insurers were also listed in the IRDAI order.
Lack of Transparency in Outsourcing Deals Raises Red Flags
Large quantities of money were paid to Policybazaar by insurance firms for outsourcing services in accordance with the directive, but many of the agreements lacked fundamental details, including the extent of the services and the rationale behind the fees.
Payments were frequently provided on a “per seat” basis, according to the regulator, with no connection to the actual services rendered. According to IRDAI, this called into doubt fairness and transparency. The inadequate state of internal record-keeping was another major worry. It is alleged that the corporation neglected to tag thousands of insurance policies to the authorised verifiers who are in charge of selling them.
Policy Tagging & Verification Gaps Expose Internal Flaws
Despite repeated demands, Policybazaar was unable to provide call recordings or the required paperwork to verify if the right procedures were followed while selling these products, according to IRDAI.
Additionally, IRDAI discovered that the business had postponed sending the insurance premiums that were collected from clients to the appropriate insurers. Policybazaar’s own payment gateway and nodal account were used to process premium payments, and in a few instances, the funds were not moved within the required 24-hour window.
IRDAI found delays of more than 30 days in a sample set of insurance. According to the regulator, this presents a systemic risk and goes against the fundamental rule that insurers can only take on risk when they have received the entire and on-time premium.
Breakdown of IRDAI’s Charges Against Policybazaar
Five of the charges resulted in warnings, advice, or instructions for corrective action, while the remaining six offences included cash penalties of INR 1 Cr apiece. Policybazaar has been instructed to produce an action taken report within ninety days and to transmit the order to its board at its upcoming meeting.
This follows PB Fintech, the parent company of Policybazaar, reporting a consolidated profit after tax (PAT) of INR 84.7 Cr in Q1 FY26, up 41% from INR 60 Cr in the same quarter last year. The remarkable gain of INR 41.1 Cr throughout the quarter was a major factor in this. In the first quarter of FY26, operating revenue increased 34% year over year to INR 1,348 Cr.
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