Question: If an insurance company in India is found to have seriously violated the Insurance Act or IRDAI's regulations, what is the maximum monetary penalty the regulator can impose on it?
Answer: Up to ₹10 crore for serious non-compliance - a substantial increase from the earlier statutory ceiling of ₹1 crore.

Supporting evidence:
title: pib.gov.in/PressReleasePage.aspx
quote: The maximum penalty for non-compliance with the Insurance Act or the IRDA Act has been enhanced from ₹1 crore to ₹10 crore
context: Indian Insurance Companies (Foreign Investment) Amendment Rules, 2025, notified on 30 December 2025 have
rationalised conditions for insurance companies and intermediaries
to promote ease of doing business.
Creation of Insurance Awareness:
The amendment provides for the creation of a Policyholders’ Education and Protection Fund, to increase citizens’ awareness towards risk protection and promote education for policyholders.
Improved Policyholders’ Protection:

To safeguard policyholder, IRDAI has been empowered to order disgorgement of wrongful gains made by insurers or intermediaries. The maximum penalty for non-compliance with the Insurance Act or the IRDA Act has been enhanced from ₹1 crore to ₹10 crore. It encourages insurers and intermediaries to adhere more strictly to rules and standards, thereby improving governance, protecting policyholders’ interests, and enhancing overall discipline and transparency in the insurance sector. Insurance intermediaries have also been included under this provision, thereby strengthening regulatory compliance.
GST Exemption
GST exemption is granted on all individual life insurance policies and health insurance policies (including family floater)
along with reinsurance w.e.f. 22 September, 2025. This measure enhances affordability for citizens, particularly underserved populations across rural and urban areas. The
removal of the 18% GST
lowers premium costs and encourages
wider adoption.
Key Regulatory Reforms in Health Insurance
To streamline compliance, enhance transparency, and strengthen policyholder rights, IRDAI has introduced several regulatory reforms in the health insurance sector. These reforms seek to simplify the health insurance experience for customers by enforcing clear rules around product design, servicing, and claims.
Shortening of Moratorium Period:
Moratorium period in health insurance is a fixed timeframe after which insurance companies cannot deny claims on the grounds of non-disclosure and misrepresentation, except on grounds of established fraud. IRDAI
reduced the moratorium period from 8 years to 60 months (5 years) in 2024
. This strengthens the policyholder protection and enhances trust in the health insurance system.
Standardized 30-day free-look period
: IRDAI introduced a standard 30-day free-look-period for policies with a term of one year or more. The free-look-period is the period given to a policyholder to assess and review the policy document. This consumer-friendly provision gives p