Insurance sector regulator IRDAI has imposed a fine of Rs 24 lakh on Policybazaar for sending a misleading SMS alert to customers. Policybazaar had sent an SMS to the customers saying “life insurance prices are set to increase from 1st April save upto Rs 1.65 lakh by buying Term plan today”. Through an email dated 7th April 2020, IRDAI had sought an explanation from Policybazaar on the SMS. The IRDAI had also advised the web aggregator to stop this SMS and furnish the basis of the advertisement.
In its response, Policybazaar had said the “SMS was an informative messaging only” and based on the “information received from their key insurance partners.” Policybazaar said “they were given to understand that the increase in premium rates is primarily on account of recent increase in the reinsurance costs.” The web aggregator also submitted that “this SMS was sent primarily to keep their customers informed about the premium increase to avoid customer grievance at a later date.”
Policybaaar claimed that the information in the said SMS was “neither misleading nor wrong and was based on specific information received from insurers as well as from public domain.”
However, after a detailed hearing of the matter, IRDAI decided that the SMS would have “created unnecessary panic and was completely avoidable”.
“Therefore, considering that the SMS was sent to about ten lakh specific customers of Policybazaar and has the potential to cause avoidable panic among the customers; they are cautioned to be more circumspect when sending such communication in future,” IRDAI said.
Rs 24 lakh fine!
Policybazaar was found in violation of Regulation 9 of IRDA (Insurance Advertisements and Disclosure Regulation, 2000. This rule stipulates that every advertisement for insurance shall state the full registered name of the insurer/intermediary/insurance agent. Policybazaar had not disclosed its name in the SMS sent to policyholders.
In its decision, IRDAI said, “Policybazaar being a regulated entity in the insurance sector ought to have known that the IRDAI Regulations have to be complied in letter and spirit. Policybazaar’s submission that it adhered to TRAI Regulations is specious and not tenable.”
“Hence, on a judicious application of the provisions of Regulations governing this violation, Policybazaar is levied a penalty of Rs Twenty Four Lakh based on the number of days the SMS was in circulation i.e. from 15th March 202 to 7th April 2020 for this violation,” it added.