Last year, Policybazaar sent an SMS to customers about an increase in past insurance policy violations that violated advertising terms and that is why a fine of Rs 24 lakh was levied on the IRDAI insurance sector regulator.
Between March 15, 2020, and April 7, 2020, Policybazaar sent SMS to its customers without stating its full registered name in this message.
About 10 lakh customers have been sent a message that life insurance prices will increase from April 1 and that they can save up to Rs 1.65 lakh by purchasing a term plan.
Charges Levied By IRDAI
The following three charges were charged by IRDAI on the web link:
• Misleading information about inflation
• Violation of Regulation 11 & 9 of advertisement
• Disclosure practices
Irdai sought clarification from Policybazaar on April 7, 2020. He asked that it stop the messages immediately and provide an ad base.
In subsequent responses, to show notice of cause and personal hearing, Policybazaar told the administrator that these SMS are informative messages based solely on information obtained from their key insurance partners.
Policybazaar said it has received links from HDFC Life, Tata AIA Life and ICICI Prudential that their future insurance premiums will increase from April 2020.
Regarding sending SMS without sending its full registered name, Policybaazar said the Trai regulation allows for a maximum of six characters and thus in the SMS header it reads as ” POLBAZ ”.
Policybaazar said he followed the guidelines of Trai (Telecom Regulatory Authority of India) when sending an SMS asking for money.
In its decision, Irdai said in terms of regulation 9, every advertisement needs to state the full name of the insurer, arbitrator and insurer.
The “Policybazaar” submission to comply with Trai Regulations is valid and may not work. This rule does not address the subject of an ad.
“This reason will include the omission of Policbbazaar ‘for the full name of the body of the ad text,” the order said.
Fine Based on Number of Days SMS Broadcast
Therefore, for the prudent use of the provisions of the regulations governing this violation, Policybazaar is subject to a fine of Rs 24 lakh based on the number of days of SMS distribution which means that from March 15, 2020 to April 7, 2020 for this violation, Irdai he said on his website on Thursday.
Irdai noted that not all life insurers raise their premium rates, and the increase was restricted to only a few insurers so SMS would create unnecessary panic and be completely avoided.
“If you consider that this SMS has been sent to an estimated 10 lakh customers in Policybazaar and has the potential to cause avoidable shock to customers, they are cautioned to be careful when sending such communications in the future,” read the instruction.
After being screened by IRDAI, the company withdrew the SMS as soon as another case related to ad practices was dropped by the regulator.
In its defense, the web aggregator said SMSes were sent to keep their customers updated rather than misleading. They have confirmed the suspension of sending SMS following IRDAI notification.