IRDAI Imposes ₹1.06 Crore Penalty On Flipkart For Insurance Regulatory Violations

The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of ₹1.06 crore on Flipkart for violating insurance e-commerce and corporate agent norms, according to media reports.

The penalty includes ₹1 crore for a breach of the Insurance E-commerce Guidelines, 2017, and ₹6 lakh for continuing to sell insurance policies without a valid certificate of registration.

The violation centers around Flipkart’s Insurance Self-Network Platform (ISNP), which is meant to facilitate the direct and integrated sale of insurance policies.

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According to the IRDAI, Flipkart misused this platform by redirecting customers to a third-party insurance intermediary’s website, which is against the rules.

IRDAI noted that Flipkart’s actions were not a mere advertisement but an unauthorised method of soliciting insurance, a clear violation of the regulations. The company discontinued the redirection once the regulator flagged it.

In addition to the ₹1 crore fine for the e-commerce guideline violation, Flipkart was fined ₹6 lakh for continuing to sell insurance policies after applying for the renewal of its certificate of registration.

The IRDAI clarified that applying for a renewal does not automatically extend the registration unless explicitly communicated, and selling insurance policies without a valid certificate is a direct breach of the IRDAI’s regulations.

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Flipkart has been instructed to pay the ₹1.06 crore penalty within 45 days, and the company must inform its board about the penalty. However, the e-commerce giant has the option to appeal the decision before the Securities Appellate Tribunal.

Also, the IRDAI chose not to impose any charges on Flipkart regarding another violation related to board composition and related party transactions.

While Flipkart, a company majority-owned by Walmart, allegedly violated regulations requiring firms with foreign majority ownership to submit an undertaking about related party transactions and board composition, the company has since complied by restructuring its board and submitting the required undertaking. As a result, IRDAI decided not to pursue charges on this matter.

In the same order, the IRDAI issued a warning to Flipkart regarding the procurement of as many as 70,000 insurance policies through a single specified person, raising concerns about the company’s compliance with regulatory requirements.