Insurance Sector Regulatory Authority Irdai has fined insurance aggregator Policybazaar Rs. Lakh for violating advertising standards related to SMS to customers last year about the increase in risk insurance premiums.
The case relates to the fact that Policybazaar sent SMS messages to its customers between March 15, 2020 and April 7, 2020 without mentioning the full registered name in the message. The web aggregator had sent text messages to around 10 lakh customers telling them that life insurance prices would go up from April 1st and that they could save up to 1.65 lakh by purchasing a term plan.
India’s Insurance Supervisory Authority (Irdai) imposed three charges on Policybazaar – sending misleading information via SMS about price increases, violations of Regulation 11 and Regulation 9 of advertising and disclosure standards.
Irdai asked Policybazaar for an explanation on April 7, 2020. He asked him to immediately stop the news and provide the basis for the advertisement. In subsequent replies, reasoning and personal hearing, Policybazaar told the regulator that the SMS was an informative message based only on the information it received from its key insurance partners.
Policybazaar announced that HDFC Life, Tata AIA Life and ICICI Prudential have announced that the term insurance premium will be increased from April 2020. With regard to sending SMS without a fully registered name, Policybaazar allows the Trai regulation to allow a maximum of six characters and thus the header of the SMS is “POLBAZ”.
Policybaazar said it followed Trai (Telecom Regulatory Authority of India) guidelines while sending the advertising SMS. In its ruling, Irdai said that Rule 9 requires the full name of the insurer, intermediary and insurance agent to be included in all advertisements.
Policybazaar’s claim that it complies with Trai rules is false and untenable. The regulation does not mention the header of the ad. “This reasoning is only intended to cover Policybazaar’s failure to include its full name in the main body of the ad text,” the order said.
In a judicious application of the provisions of the regulations governing this violation, Policybazaar will be charged a penalty of Rs. 24 lakh based on the number of days the SMS was in circulation, i.e. from March 15, 2020 to March 7, 2020. April 2020 for this violation. Irdai said in the order on its website on Thursday.
Irdai noted that not all life insurers increased their premium rates and the increase was limited to only a few insurers, so the SMS would have caused unnecessary panic and was completely preventable. “Given that the SMS has been sent to around 10 lakh-specific Policybazaar customers and potentially creates avoidable panic among customers, it is recommended that they be more careful about sending such communications in the future,” the order said.
The regulator dropped another charge related to Advertising norms as the aggregator withdrew the SMS immediately after Irdai notified the company. Policybazaar said it issued the SMS to keep its customers informed and not to mislead customers. They also confirmed they stopped texting immediately after receiving the agency’s notice, Irdai said.