Kathmandu. The Indian insurance regulator has imposed a fine of Rs 1.06 crore (1 crore 69 lakh) on Indian e-commerce company Flipkart for violating regulations.
The regulator has taken action against Flipkart for selling insurance policies through other agents after it obtained a license as a institutional agent to sell insurance policies of other insurers through its digital platform. According to the regulator, it has been found to have violated the Corporate Agent Rules, 2015 and the Insurance E-Commerce Guidelines, 2017 and the Registration of Corporate Agents Rules, 2015. The regulator has imposed a penalty of Rs 1 crore on Flipkart for violating Section 15.1(b) of the Insurance E-Commerce Guidelines, 2017.
According to the regulator, when a prospective customer visits Flipkart’s website and clicks on the “Buy Insurance” option, the website redirects them to a third-party, i.e. another insurance intermediary, and completes the policy purchase process from there.
According to Asian Insurance Post, the regulator had approved the operation of insurance self-service networks for institutional agents to integrate directly with insurance companies, and not through other insurance intermediaries. Flipkart’s practice of referring customers to other insurance intermediary platforms is in violation of regulatory provisions and has facilitated an unauthorized insurance distribution channel, the authority said in an order issued on Monday.
In another case, the authority had found that Flipkart was selling and purchasing retail insurance policies even after its registration certificate expired. The company was fined Rs 6 lakh for such negligence.
Furthermore, the authority said that Flipkart had purchased more than 70,000 insurance policies from just one designated person in a year, whereas the rules mandate that corporate agents can solicit and purchase a reasonable number of insurance policies commensurate with their resources and the number of designated persons they work with.”
Furthermore, instead of providing direct services to the insured, Flipkart was directing the insured to a website that would direct them to the insurer’s helpdesk in case of any consultation or assistance required, the regulator’s order stated.
