The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a Rs 5 crore fine on Policybazaar for regulatory violations. 

The penalty stems from a remote audit conducted in June 2020, with the final ruling delivered on August 4.

A major violation involved the company's failure to inform regulators about key leadership personnel holding board positions at other firms.

Insurance regulations mandate that web aggregators must report any significant changes in their management structure to authorities.

The regulator also criticized Policybazaar's website practices, specifically the labeling of certain insurance products as "Top" or "Best" without proper justification. 

IRDAI stated that such marketing tactics could unfairly influence customer decisions and are only acceptable when supported by verified, independent data sources.

Financial arrangements with insurance companies also drew scrutiny. The platform received substantial payments for outsourced services through agreements that lacked essential details about service scope and fee justification. Many payments followed a "per seat" model without connection to actual work performed, raising transparency concerns.

Record-keeping deficiencies presented another serious issue. Thousands of policies weren't properly linked to their authorized sellers, and despite multiple requests, Policybazaar couldn't provide call recordings or documentation proving proper sales procedures were followed.

Perhaps most critically, the company delayed transferring customer premiums to insurers. While regulations require transfers within 24 hours of collection through Policybazaar's payment systems, some delays exceeded 30 days in sample cases reviewed. This practice creates systemic risks since insurers can only provide coverage after receiving full, timely premium payments.

The regulator issued six charges carrying Rs 1 crore penalties each, plus five additional violations resulting in warnings and corrective action requirements. 

Policybazaar, a subsidiary of listed PB Fintech, must present these findings to its board and submit a compliance report within 90 days.

In July, the IRDAI also imposed a fine of Rs 3.39 crore penalty on Star Health Insurance for violating guidelines pertaining to safeguard of data and cyber security.

Last month month, the insurance regulator also levied a fine of Rs 10 lakh on Tata AIA Life Insurance for excess payment to corporate agents.

In June, IRDAI slapped a fine of Rs 1 crore on Edelweiss Life Insurance for violations of certain corporate governance guidelines.