The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a ₹1 crore penalty on ICICI Lombard General Insurance for lapses in outsourcing practices, vendor management and corporate governance during an inspection conducted in 2019. According to reports from The Economic Times, the penalty relates to payments made by the insurer under the head 'sales marketing and business support' during FY19. The company received the order dated September 7, 2026, following an onsite inspection conducted by IRDAI in September 2019, with subsequent Show Cause Notices issued on July 8, 2024, and December 17, 2024.
During FY19, ICICI Lombard had incurred ₹709.57 crore under the 'sales marketing and business support' head, of which the insurer said that about ₹35-37 crore was paid to individual agents of other insurers. As reported by The Economic Times, this represents a significant portion of the total outsourcing expenses for the insurance company. The penalty was imposed with respect to certain aspects pertaining to outsourcing activities undertaken by ICICI Lombard under the Outsourcing Regulations, 2017, read with the Corporate Governance Guidelines, 2016.
IRDAI stated that the insurer used agents of other insurers for event management activities, without adequate supporting documents, and failed to classify the activities as outsourced or report them in outsourcing returns. According to the regulator's September 7 order reported by The Economic Times, by not classifying event management services as outsourced activity, the insurer failed to report these expenses in the Outsourcing Returns thereby avoiding regulatory scrutiny in time. Additionally, IRDAI has issued additional directions and advisories to ICICI Lombard and advised the company to comply with them within specified timelines.
The regulatory lapses included the insurer's failure to classify event management services involving agents of other insurers as outsourced activities or report related expenses. As reported by The Economic Times, this classification failure prevented proper regulatory oversight and compliance with outsourcing disclosure requirements under IRDAI guidelines. The company was provided an opportunity for a personal hearing and additional submissions during the regulatory process.
ICICI Lombard General Insurance reported mixed financial results for Q1FY27, with a 46% year-on-year decline in standalone net profit to ₹403 crore according to an exchange filing. However, Net Premium Earned rose 16% YoY to ₹5,950 crore from ₹5,136 crore a year ago, while Gross Direct Premium Income (GDPI) increased 7.5% to ₹8,318 crore. The insurer's solvency ratio improved to 2.71x as of June 30, 2026, from 2.67x in March and remained well above the regulatory minimum of 1.50x. However, the combined ratio worsened to 107.2% from 102.9% a year ago, with two large fire claims worth ₹63 crore and an additional ₹165 crore provision for Motor Third-Party claims contributing to the deterioration.
