Insurance aggregator, PolicyBazaar has been fined for Rs 24 lakh by insurance sector regulatory body IRDAI. The charges levelled against the startup were pertaining to violating advertisement norms with regard to SMS sent to customers about terms insurance policy premiums. In total three charges were of potential violation of IRDAI norms were levelled against PolicyBazaar.

Between March 15, 2020 and April 7, 2020, the insurance aggregator had sent the following SMS to 10 lakh customers, “life insurance prices are set to increase from 1st April (2020), save up to 1.65 lakh by buying a term plan now”. IRDAI maintained that the message had potential to cause avoidable panic among customers.

The other two counts of violation pertained to failure to mention the company’s full name in the SMS header and the measures taken to stop the circulation of the SMS.

The regulatory body had sought an explanation from Policybazaaron April 7, 2020. The company was asked stop the circulation of the messages forthwith and to furnish the basis of the advertisement. In response Policybazaarexplained that the SMS was an informative messaging only based on the information it received from their key insurance partners, HDFC Life, Tata AIA Life and ICICI Prudential.

In terms of sending SMS without its full registered name, the company said that according to TRAI regulations, a maximum of six characters were allowed, thus the message header of the SMS read 'POLBAZ'.

IRDAI said that not every life insurance providerhad increased their premium rates, thus the SMS would have created unnecessary panic and was completely avoidable. "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.

However, charges pertaining to advertising norms were dropped by the regulatory body since PolicyBazaar had immediately withdrawn the SMS.