You are reading it first here. The Insurance Regulatory and Development Authority of India (IRDAI) has fined PolicyX.com, an insurance web aggregator 14 lakh rupees for violating its solicitation guidelines. The final order passed on 9th December said that there were cases of engaging persons who were not Authorized Verifiers.
The fine comes after IRDAI conducted an inspection of PolicyX from 01/06/2020 to 05/06/2020. The inspection was to examine the overall regulatory compliance.
What’s the issue?
IRDAI’s inspection found several lacunas in PolicyX’s compliance with the existing regulations. As such, the regulatory authority communicated its finding to PolicyX on 28th August 2020. The web aggregator submitted a written reply and also sought a hearing.
IRDAI charged PolicyX with 8 infractions on a wide range of non-compliances. They included:
- Completing insurance of policy after 3 months of lead generation;
- Sourcing non-single yearly premium policy of more than Rs. 1.5 lakh;
- Not submitting disclosure to Authority;
- Promoting the insurers on its website;
- Not updating the list of Authorized Verifiers (AVs) on the data base of insurance information Bureau of India;
- Not having PI Policies as prescribed by the Regulations;
- Failure to provide copies of agreements to the Authority; and
- soliciting insurance through tele-marketing and distance marketing by persons other than AVs.
Except for the last charge, IRDAI issued caution & advisory for various reasons. Further, IRDAI did not press charges against not providing copies of agreements to the Authority.
Which rules are we talking about?
The Rules in question here are the IRDA (Insurance Web Aggregators) Regulations, 2013 and the subsequent IRDAI (Insurance Web Aggregators) Regulations, 2017. According to Form T in 2017 rules, only a certified Authorized Verifier, can solicit insurance policies. It says:
2. Telemarketing and Distance Marketing
Insuurance Web Aggregator intending to carry on ‘Telemarketing’ and ‘Distance Marketing’, for the purpose of solicitation of insurance business shall
a) Register as a ‘Telemarketer’.
b) Engage ‘Authorized Verifier’ as defined in Regulation 2(c) of these regulations for carrying out the Telemarketing and Distance Marketing related work.
In this case, the IRDAI observed that the company engaged persons in the solicitation process who did not possess the necessary qualifications and training. There were also cases where the person passed the exam at a later date, and where the person did not pass the exam.
Hence, the authority found PolicyX in violation of Para 4(a) and 4(c) of Form T of Schedule Vi read with Regulation 29 of the 2017 regulations.
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