IRDAI has fined ICICI Lombard General Insurance Rs 1 crore for lapses in outsourced activities, vendor management and corporate governance, following an onsite inspection conducted from September 16 to 27, 2019. A show-cause notice followed in July 2024, a supplementary notice in December 2024, and two personal hearings. The order also flagged unallocated premium balances and delays in refunding free-look cancellations, per Outlook Money and Livemint.

The numbers behind the fine

  • In FY2018-19, ICICI Lombard spent Rs 709.57 crore under "sales marketing and business support".
  • About Rs 35-37 crore of that was paid to individual agents associated with other insurers for event management.
  • Invoices lacked supporting records: event approvals, agendas, attendee details, speakers' information, travel, hotel and catering bills.
  • Unallocated premium balances of Rs 443 crore (March 31, 2019) and Rs 277 crore (March 31, 2018); about Rs 10 crore in the sample examined was unallocated.
  • 14 free-look cancellation requests had not been refunded within 15 days; the insurer attributed 11 to a technical error.

Why IRDAI rejected the insurer's defence

ICICI Lombard argued that event management was ancillary and outside outsourcing regulations, and that vendors were checked for identity, PAN and bank details. IRDAI held that customer programmes, seminars and public campaigns affect policyholder engagement, brand reputation and compliance communication, and therefore fall within outsourcing rules. It also said the insurer had no Board-approved vendor-management policy covering selection and assessment of third-party service providers.

What this means for policyholders

The fine is modest next to the insurer's balance sheet, but the advisory items touch policyholder money directly. Unallocated premium sits with the insurer, not the policyholder. Free-look refunds are a contractual right: if you cancel within the free-look window, the refund is due within the prescribed period. A pattern of delayed refunds is now on the regulator's record for this insurer.

What to do

  • If you cancelled a policy within the free-look period and did not receive the refund within 15 days, ask the insurer for the refund date and reference in writing.
  • Check that any premium you paid appears as allocated to your policy; if not, request the allocation status.
  • Escalate unactioned refunds to the Grievance Redressal Officer, then bimabharosa.irdai.gov.in.

Watch next

Whether IRDAI makes the vendor-management and unallocated-premium findings part of a thematic inspection across general insurers, and whether the insurer's action-taken report, due within 90 days, is disclosed.