Policy aggregator Policybazaar has been fined Rs 24 lakh by the Insurance Regulatory and Development Authority of India (IRDAI) for breaching advertising norms in relation to SMSs sent to customers last year regarding increases in term insurance policy premiums.
The Insurance Regulatory and Development Authority of India (Irdai) charged Policybazaar with three charges: sending false information about price increases via SMS, and violating regulations 11 and 9 of the advertising and disclosure norms.
The issue involves Policybazaar sending SMS to its customers without specifying its full registered name in the message between March 15, 2020, and April 7, 2020. The web aggregator sent SMS to around 10 lakh customers, informing them that life insurance rates would rise on April 1 and that they could save up to Rs 1.65 lakh by purchasing a term plan.
On April 7, 2020, Irdai requested an explanation from Policybazaar. It requested that the messages be stopped immediately and that the basis for the advertising be given.
HDFC Life, Tata AIA Life, and ICICI Prudential have all told Policybazaar that their term insurance premiums will rise in April 2020.
In regards to sending SMS without using the company's full registered name, Policybaazar explained that the Trai regulation only allows for six characters, so the header of the SMS must-read 'POLBAZ'.
"Considering that the SMS was sent to about 10 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 communications in future," read the order.
Policybazaar claimed that the SMS was sent to keep customers informed and not to deceive them. They also reported that they immediately stopped sending SMS after receiving the Authority's communication, according to Irdai.