The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a monetary penalty of Rs 1.06 crore on Flipkart Internet Pvt Ltd (FIPL) for breaching multiple regulatory provisions related to insurance e-commerce operations and corporate agency norms.
The primary fine, amounting to Rs 1 crore, stems from Flipkart’s violation of the Insurance E-commerce Guidelines, 2017. According to the IRDAI, FIPL misused its Insurance Self-Network Platform (ISNP) by redirecting potential customers to the webpage of another insurance intermediary, instead of integrating directly with insurers.
This redirection, the regulator noted, constituted an unauthorized method of insurance solicitation, rather than mere digital advertisement as claimed by Flipkart.
IRDAI members Satyajit Tripathy (Distribution) and Rajay Kumar Sinha (Finance & Investment), in their order, stated that while Flipkart had received ISNP certification to facilitate direct online insurance sales, its actions amounted to regulatory non-compliance.
The financial arrangement between FIPL and the intermediary, IRDAI observed, went beyond simple advertising and hinted at indirect solicitation of insurance business.
Flipkart had argued that it only offered digital ad space to the insurance intermediary, without any referral or intermediary agreement.
However, the IRDAI rejected this claim, stating that the nature of the redirection clearly violated regulatory guidelines. Although Flipkart discontinued the redirection once the matter was brought to its attention, the breach had already occurred.
An additional penalty of Rs 6 lakh was levied on FIPL for continuing to sell insurance policies after applying for the renewal of its certificate of registration. As per IRDAI norms, mere submission of a renewal application does not extend the validity of registration unless explicitly communicated.
The sale of policies during this period was deemed a violation of Clause 3(ii)(a) of Schedule III, read with Regulation 26 of the IRDAI (Registration of Corporate Agents) Regulations, 2015.
The regulatory body highlighted that, even within a short span of less than a week, FIPL managed to solicit and sell a substantial number of insurance policies without a valid certificate of registration.
Further, the IRDAI issued a warning to Flipkart regarding the procurement of nearly 70,000 policies through a single specified person, raising concerns over compliance with distribution norms. However, no monetary penalty was imposed for this particular instance.
The regulator also noted earlier concerns regarding Flipkart’s failure to submit required undertakings and ensure board composition in line with norms for companies with majority foreign ownership.
However, as Flipkart subsequently provided the necessary documents and restructured its board, the IRDAI opted not to pursue charges on that front.
FIPL has been directed to remit the penalty amount within 45 days and inform its Board of Directors. The company retains the right to appeal the decision before the Securities Appellate Tribunal.