Mis-selling continues to plague India’s insurance industry, even as disclosure norms and regulatory oversight have been strengthened. Data from theIRDAI Annual Report 2024–25shows that grievances categorised underUnfair Business Practices (UFBP)rose to26,667 cases in FY25, up from23,335 in FY24, marking a year-on-year increase of about14%.
As a proportion of total grievances against life insurers, UFBP complaints climbed to22.14%from19.33%a year earlier. While overall complaint volumes against life insurers remained broadly stable, the sharp rise in unfair sales-related grievances signals that mis-selling remains deeply entrenched.
In its report, IRDAI explicitly described mis-selling as a “significant concern”, defining it as the sale of insurance products without adequate disclosure of terms, conditions, or suitability for customers. The regulator urged insurers to conduct regular root cause analyses and strengthen product suitability checks, especially across different distribution channels.
Life insurance products—particularly those combining insurance with savings or investment components—continue to attract the highest number of complaints. Issues around unclear disclosures, unrealistic return expectations and inappropriate product recommendations remain common.
The report also highlights the dominant role of intermediaries in life insurance sales. Corporate agents, including banks, accounted for nearly53%of private life insurers’ individual new business premium in FY25, with banks alone contributing over49%. Direct selling and digital channels together still form a relatively small share, reinforcing concerns around agent-driven mis-selling.
On grievance redressal, IRDAI noted improvements through platforms such asBima Bharosaand the IRDAI Grievance Call Centre. Of the2.57 lakh grievancesreceived during FY25, most were resolved within prescribed timelines. However, outcomes were mixed: over15,000 UFBP caseswere decided against policyholders, while about11,400 caseswere resolved fully or partially in their favour.
Despite measures such as customer information sheets, free-look periods, suitability assessments and mandatory grievance committees, the regulator acknowledged that challenges persist. IRDAI said it will continue to closely monitor unfair business practices as insurance penetration expands, reiterating its focus on strengthening policyholder protection.
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