The Insurance Regulatory and Development Authority (IRDAI) has slapped a penalty of Rs 1.06 crore on Flipkart Internet Private Limited (FIPL). This action was taken due to multiple violations of regulations governing insurance e-commerce operations and corporate agency norms. Following an investigation, IRDAI found that Flipkart had breached several regulatory provisions, including the misuse of its Insurance Self-Network Platform (ISNP), prompting this stringent measure.
According to IRDAI, Flipkart was certified to sell insurance policies directly and seamlessly through its ISNP, a platform designed to connect customers directly with insurance companies. However, the investigation revealed that when a customer clicked the “Buy Insurance” button on Flipkart’s ISNP website, they were redirected to the website of another insurance intermediary. This practice was deemed a violation of the 2017 Insurance E-Commerce Guidelines, which explicitly state that an ISNP must integrate solely with insurance companies, not with other intermediaries or agents. For this breach, Flipkart was fined Rs 1 crore.
Additionally, Flipkart continued selling insurance policies even after applying for the renewal of its Corporate Agent Registration Certificate (CoR), marking yet another regulatory violation. In its order, IRDAI clarified that submitting a renewal application does not automatically extend registration unless explicitly notified by the authority. During this period, Flipkart sold approximately 400 motor insurance policies, leading to an additional fine of Rs 6 lakh. This violation contravened the provisions of the IRDAI (Registration of Corporate Agents) Regulations, 2015.
IRDAI also expressed concern that Flipkart sold over 70,000 policies in a year with only one “Specified Person” authorized to handle insurance sales. The regulator viewed this as inadequate human resources, potentially hindering effective service delivery to policyholders. Flipkart argued that its technology-driven model reduces the need for human intervention, but it acknowledged the shortfall and has begun the process of hiring more trained professionals.
A Flipkart spokesperson stated, “We are committed to regulatory compliance and the highest governance standards. We are currently reviewing this order.” Meanwhile, IRDAI has directed Flipkart to deposit the penalty amount within 45 days and confirm compliance within 21 days. The company also has the option to appeal the decision before the Securities Appellate Tribunal.
This incident is being seen as a warning to e-commerce giants venturing into regulated sectors like insurance. Experts believe it underscores the importance of regulatory compliance and advises consumers to verify the expertise and adherence of big brands rather than trusting them blindly.
