IRDAI's Wake-Up Call: Mis-Selling Madness Inflates Grievances to 22%, Sparking Bold Reforms for Savvy Policyholders

The Insurance Regulatory and Development Authority of India (IRDAI) has identified mis-selling as a persistent challenge, where agents push policies without fully explaining terms, conditions, or suitability to customers. This practice burdens consumers with mismatched products, often leading to unexpectedly high premiums and policy lapses when renewals are skipped. Total grievances against life insurers held steady at around 1,20,429 in FY25, but the unfair business practices (UFBP) segment jumped notably, signaling deeper systemic flaws.

 

IRDAI urges insurers to dig into root causes through periodic analyses, tailoring solutions like product suitability checks and channel-specific safeguards. Finance Ministry warnings echo this, stressing corporate governance amid bancassurance growth, where banks leverage customer trust but sometimes prioritize sales over fit. Despite static insurance penetration at 3.7% of GDP—below global 7.3% average—density rose modestly to $97 per capita.

 

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Sources: The Economic Times, The Hindu BusinessLine, PTI News, Business Standard