ICICI Lombard is looking at a ₹1 crore penalty from IRDAI over how it handled outsourcing and corporate governance requirements. The inspection behind this happened in 2019, so the matter has been with the regulator for a long time. There’s more than just the fine too. IRDAI also called out unallocated premium sitting around unresolved, plus refunds under the free-look cancellation window taking longer than they should.
IRDAI has imposed a ₹1 crore penalty on ICICI Lombard General Insurance Company Limited, in an order dated 7 September 2026. The action follows an on-site inspection conducted back in September 2019, with show-cause notices issued to the insurer in July and December 2024, and a personal hearing before the regulator’s panel.
What the IRDAI Order Covers
The order (Ref. IRDAI/E&C/ORD/MISC/116/9/2026) found ICICI Lombard in violation of the IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2017 and the Guidelines for Corporate Governance for insurers, imposed under Section 102 of the Insurance Act, 1938.
The core issue concerned how the insurer classified and reported certain event-management and sales-marketing payments, including amounts paid to individual agents of other insurers, without adequate due diligence or supporting documentation.
The order requires ICICI Lombard to place it before its board and submit an action-taken report within 90 days, with the option to appeal before the Securities Appellate Tribunal.
The Advisories: Unallocated Premium and Free-Look Delays
Two further matters in the same order did not attract a monetary penalty but led IRDAI to issue formal advisories instead:
- Unallocated premium amounts collected from customers that had not yet been matched to a specific policy or proposal, which the regulator asked the insurer to reconcile and bring into compliance with existing master circulars.
- Delays in processing free-look cancellation refunds beyond the prescribed turnaround time, in a sample of cases reviewed during the inspection.
What This Means If You Hold a Policy
For an ordinary policyholder, these two issues are worth understanding on their own terms.
- The free look period allows the policyholder to cancel a newly purchased policy if they do not wish to keep it; under IRDAI’s 2024 Protection of Interests of Policyholders Regulations, the free look period is 30 days for policies with a term of more than 1 year.
- Unallocated premium refers to money an insurer receives but has not yet applied to a specific policy; so review your policy documents or premium receipts to confirm how your premium was allocated.
If the free-look refund or any other claim is pending beyond the time that is promised by your insurance company, the next step is to first discuss this with the insurance company’s grievance cell, and if this doesn’t resolve the issue, it can be taken to the Insurance Ombudsman or to IRDAI’s Bima Bharosa portal.
Part of a Wider Enforcement Push
This order isn’t an isolated event. approved the (Manner and Procedure for Imposition of Penalties) Regulations, 2026, at its 137th Authority Meeting in July 2026, to make enforcement more uniform and transparent across insurers.
It also follows a similarly structured ₹1 crore penalty on Reliance General Insurance in December 2025 over outsourcing and intermediary-payment violations, suggesting outsourcing compliance has become a consistent regulatory focus across the general insurance industry, not something specific to one insurer.
Get an Independent Policy ReviewWondering if your own insurer’s processes, refund timelines or grievance handling hold up? Book a commission-free consultation with MyRupia to review your policy, check on any pending refunds or claims, and get a second opinion as insurers navigate greater regulatory scrutiny. |
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