Insurance Mis-selling in India is No Longer a Marginal Issue
Insurance mis-selling in India has moved from being an occasional complaint to becoming a structural concern that regulators, insurers, banks, and intermediaries can no longer afford to overlook.
In its latest Annual Report 2024–25, the Insurance Regulatory and Development Authority of India (IRDAI) has clearly flagged mis-selling as a key risk undermining customer trust, policy persistency, and long-term insurance penetration in the country.
What makes this warning particularly significant is not just the volume of complaints, but the regulator’s clear expectation that insurers must now go beyond surface-level redressal and conduct root cause analysis to address systemic failures in insurance sales practices.
What Exactly Does Insurance Mis-selling in India Mean?
In simple terms, insurance mis-selling in India refers to the sale of insurance products without ensuring that the policy is suitable for the customer, or without fully and transparently disclosing key terms, exclusions, costs, or long-term implications.
Mis-selling may occur when:
- Products are pushed purely for higher commissions
- Risks, lock-in periods, or surrender penalties are downplayed
- Policies are bundled with loans or bank products without informed consent
- Customers are misled about guaranteed returns or benefits
Over time, such practices lead to customer dissatisfaction, policy lapses, and erosion of trust in the insurance ecosystem.
Rising UFBP Complaints: What the IRDAI Data Reveals
The IRDAI Annual Report provides a telling snapshot of how insurance mis-selling in India is translating into formal grievances.
Grievance Snapshot: FY24 vs FY25
| Particulars | FY 2023–24 | FY 2024–25 |
|---|---|---|
| Total grievances against life insurers | 1,20,726 | 1,20,429 |
| UFBP grievances | 23,335 | 26,667 |
| UFBP share of total grievances | 19.33% | 22.14% |
While overall grievance numbers have remained largely stable, complaints related to Unfair Business Practices (UFBP) have increased sharply—both in absolute terms and as a percentage of total grievances.
This shift indicates that customer dissatisfaction is increasingly linked to how insurance products are sold, not merely to claim servicing or administrative issues.
Why IRDAI Is Insisting on Root Cause Analysis
The regulator has made it clear that addressing insurance mis-selling in India cannot be limited to resolving individual complaints.
Insurers have been specifically advised to:
- Assess product suitability at the point of sale
- Introduce channel-specific controls (agents, banks, digital platforms)
- Periodically analyse mis-selling grievances to identify root causes
- Develop structured action plans to reduce recurrence
This approach signals a move away from reactive compliance towards preventive governance.
Mis-selling, High Premiums and Rising Policy Lapses
One of the most damaging consequences of insurance mis-selling in India is its direct impact on policy persistency.
When customers realise that:
- Premiums are higher than expected
- Benefits do not match sales promises
- Lock-in periods restrict exits
they often choose not to renew their policies. This results in:
- Higher lapse ratios
- Poor long-term coverage outcomes
- Financial losses for policyholders
- Distorted penetration statistics
In effect, mis-selling hurts both consumers and insurers.
Insurance Penetration vs Insurance Density: A Reality Check
Despite decades of growth, India’s insurance coverage indicators remain below global benchmarks.
Key Metrics Highlighted by IRDAI
| Indicator | FY 2023–24 | FY 2024–25 |
|---|---|---|
| Insurance penetration (overall) | 3.7% | 3.7% |
| Global average penetration | — | 7.3% |
| Life insurance penetration | 2.8% | 2.7% |
| Non-life penetration | 1.0% | 1.0% |
| Insurance density (USD) | 95 | 97 |
| Life insurance density (USD) | 70 | 72 |
| Non-life insurance density (USD) | 25 | 25 |
While insurance density shows a slow but consistent rise, insurance penetration remains stagnant. This gap underscores why IRDAI views insurance mis-selling in India as a major obstacle to sustainable growth.
Why Mis-selling Directly Impacts Insurance Growth
When customers lose trust due to mis-selling:
- First-time buyers hesitate to purchase insurance
- Existing customers avoid renewing or upgrading
- Word-of-mouth discourages new entrants
As a result, the sector struggles to move beyond incremental growth, despite product innovation and digital distribution.
Government and Finance Ministry’s Repeated Warnings
The concern around insurance mis-selling in India is not limited to IRDAI alone.
The Finance Ministry has repeatedly cautioned:
- Banks involved in bancassurance
- Insurance companies
- Intermediaries
to uphold corporate governance standards and avoid product pushing driven purely by incentive structures.
This regulatory convergence reflects a broader policy intent: insurance must serve protection needs, not sales targets.
Major Legal Shift: Sabka Bima Sabki Raksha Bill, 2025
India is now moving decisively to curb insurance mis-selling in India through legislative reform.
Under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, IRDAI is being granted enhanced powers to regulate how commissions and incentives are structured.
What Is Changing Legally?
At the heart of the reform is Clause 36, which amends Insurance Act, 1938 by modifying Section 40.
The amendment explicitly authorises IRDAI to:
- Decide how commissions are structured
- Cap commissions and incentives
- Mandate disclosure of commissions to policyholders
- Address conflicts of interest across distribution channels
Existing vs Enhanced IRDAI Powers
| Aspect | Earlier Framework | Post-Amendment |
|---|---|---|
| Commission structure | Largely product-linked | Regulator-defined |
| Disclosure norms | Limited visibility | Mandatory transparency |
| Conflict of interest control | Indirect | Explicit authority |
| Enforcement scope | Fragmented | Centralised with IRDAI |
This shift directly targets the incentive-driven behaviour that fuels insurance mis-selling in India.
Impact on Banks, Agents, Brokers and Insurers
The regulatory tightening will have a deep operational impact across the ecosystem.
Banks & Bancassurance
- Reduced scope for bundled or forced selling
- Higher accountability for suitability checks
Insurance Agents
- Sales conversations will require stronger documentation
- Focus to shift from commission to customer profiling
Insurance Brokers
- Enhanced compliance and disclosure responsibility
- Stronger governance frameworks expected
Insurers
- Product design will need alignment with customer needs
- Distribution oversight will become a board-level issue
Compliance Perspective: What Market Participants Must Do Now
From a compliance standpoint, insurance mis-selling in India demands urgent action, not future planning.
Key steps include:
- Revisiting sales scripts and proposal documentation
- Strengthening training and certification programmes
- Implementing grievance analytics and root cause reporting
- Aligning incentive structures with persistency and suitability
For regulated entities, this is no longer optional—it is foundational to business sustainability.
Why This Moment Matters for Policyholders
For customers, IRDAI’s stance on insurance mis-selling in India is a strong signal that:
- Transparency will improve
- Disclosure norms will strengthen
- Sales accountability will increase
Over time, this should translate into better product alignment, fewer disputes, and stronger confidence in insurance as a financial safety net.
Insurance Mis-selling in India and the Role of Disclosure Transparency
One of the most critical gaps enabling insurance mis-selling in India has historically been the absence of clear, customer-friendly disclosure around commissions, incentives, and long-term cost implications.
Most policyholders are unaware of:
- How much commission is built into their premium
- Whether the product recommended offers higher incentives than alternatives
- How distributor incentives may influence product suitability
With IRDAI now empowered to mandate commission disclosure, the sales dynamic is expected to shift from persuasion to explanation.
This transition is not merely regulatory—it is cultural.
Why Disclosure Alone Is Not Enough
While disclosure is essential, insurance mis-selling in India cannot be addressed through paperwork alone.
Experience shows that:
- Lengthy policy documents do not guarantee understanding
- Technical disclosures often overwhelm first-time buyers
- Customers rely more on verbal explanations than written clauses
Therefore, insurers and intermediaries must complement disclosures with:
- Simplified benefit illustrations
- Clear suitability statements
- Recorded confirmations of customer understanding
Regulatory compliance must align with real-world customer behaviour.
Distribution Channel–Wise Mis-selling Risks
IRDAI has specifically highlighted the need for distribution channel–specific controls, acknowledging that mis-selling risks vary across channels.
Channel Risk Overview
| Distribution Channel | Common Mis-selling Risk |
|---|---|
| Individual agents | Return exaggeration, incomplete disclosure |
| Bancassurance | Bundled or forced selling |
| Corporate agents | Volume-driven product pushing |
| Digital platforms | Inadequate explanation, auto-default selections |
| Tele-sales | Consent ambiguity, rushed decisions |
Addressing insurance mis-selling in India therefore requires customised controls rather than a one-size-fits-all approach.
Root Cause Analysis: What Insurers Are Expected to Examine
IRDAI’s insistence on root cause analysis is a decisive shift in regulatory expectation.
Insurers are now expected to analyse:
- Whether complaints arise from specific products
- Whether particular branches or regions show patterns
- Whether certain channels have higher grievance ratios
- Whether training gaps or incentive structures are contributing factors
This data-driven governance model aims to prevent mis-selling before it occurs, rather than reacting after damage is done.
Link Between Mis-selling and Persistency Ratios
Persistency is emerging as one of the most telling indicators of insurance mis-selling in India.
Low persistency often signals:
- Misaligned product expectations
- Affordability stress due to high premiums
- Inadequate explanation at the time of sale
Regulators increasingly view persistency not just as a business metric, but as a customer protection indicator.
Why Insurance Penetration Remains Stagnant Despite Growth
India’s insurance market continues to grow in absolute terms, yet penetration remains flat.
This paradox is closely linked to insurance mis-selling in India:
- Customers exit the ecosystem after negative experiences
- First-time buyers are discouraged by complexity and distrust
- Long-term coverage goals remain unmet
Until sales practices prioritise trust over targets, penetration figures are unlikely to match India’s economic scale.
How the New Legal Framework Changes Accountability
With the Sabka Bima Sabki Raksha amendments, accountability is shifting decisively.
Key implications include:
- Regulators can directly intervene in commission design
- Intermediaries can no longer justify mis-selling as “market practice”
- Boards and senior management become responsible for sales governance
This elevates insurance mis-selling in India from a sales issue to a governance issue.
Governance Expectations at Board and Management Level
Regulators now expect boards to:
- Monitor mis-selling indicators regularly
- Review grievance trends and corrective actions
- Oversee incentive alignment and ethical selling frameworks
Sales outcomes without governance oversight may invite regulatory scrutiny.
Customer Awareness: A Silent but Powerful Regulator
An often overlooked factor in curbing insurance mis-selling in India is the rising awareness among policyholders.
Customers today are:
- Comparing policies across platforms
- Questioning returns and charges
- Escalating grievances more confidently
As awareness grows, tolerance for opaque selling practices is shrinking.
What This Means for the Future of Insurance Sales in India
The message from IRDAI is unambiguous:
Growth driven by mis-selling is neither acceptable nor sustainable.
The future of insurance distribution will be defined by:
- Suitability over sales volume
- Transparency over persuasion
- Long-term relationships over one-time conversions
Entities that adapt early will not only remain compliant but also earn enduring trust in a rapidly evolving market.
Insurance Mis-selling in India and Its Impact on Industry Reputation
Over the years, insurance mis-selling in India has quietly eroded the credibility of an otherwise essential financial protection industry. While insurers invest heavily in product innovation and digital onboarding, a single mis-selling experience is often enough to permanently alienate a customer.
From a reputational standpoint:
- Customers remember the sale experience more than the policy document
- Negative experiences spread faster than positive outcomes
- Trust, once broken, is extremely difficult to rebuild
This reputational damage does not remain limited to one insurer or intermediary. It impacts the industry as a whole.
Why Ethical Selling Is Becoming a Competitive Advantage
In the new regulatory environment, ethical selling is no longer just a compliance requirement—it is a business differentiator.
Organisations that proactively address insurance mis-selling in India are witnessing:
- Higher policy persistency
- Lower grievance ratios
- Stronger customer referrals
- Better regulator confidence
As regulatory scrutiny intensifies, ethical sales practices are quietly emerging as a long-term growth strategy.
Training and Certification: The First Line of Defence
One of the recurring root causes identified in mis-selling cases is inadequate training.
To control insurance mis-selling in India, insurers and intermediaries must ensure that:
- Sales personnel understand product nuances
- Suitability assessments are not treated as formalities
- Regulatory obligations are explained in practical terms
Periodic certification, refresher programmes, and scenario-based training can significantly reduce unintentional mis-selling.
The Shift from Sales Targets to Customer Outcomes
Historically, insurance sales have been driven by volume-based targets. However, this approach has directly contributed to insurance mis-selling in India.
Regulators are now encouraging a shift towards:
- Persistency-linked incentives
- Quality-of-sale metrics
- Complaint ratios as performance indicators
This shift realigns commercial objectives with customer welfare.
Digital Distribution: Opportunity and Responsibility
Digital platforms have expanded insurance access, but they also introduce new mis-selling risks.
Common digital mis-selling triggers include:
- Pre-selected options without adequate explanation
- Over-simplified return illustrations
- Limited human intervention in complex products
To prevent insurance mis-selling in India in digital channels, platforms must balance convenience with clarity.
Role of Grievance Redressal in Early Detection
Grievance data is no longer just a post-sale formality—it is an early warning system.
Effective grievance analysis helps insurers:
- Identify recurring mis-selling patterns
- Detect channel-level weaknesses
- Initiate corrective training or disciplinary action
IRDAI’s emphasis on grievance analytics reflects its role in preventing systemic mis-selling.
Why Mis-selling Is a Governance Issue, Not Just a Sales Issue
One of the most important regulatory messages is that insurance mis-selling in India is ultimately a governance failure.
Sales teams may execute transactions, but:
- Boards approve incentive frameworks
- Senior management sets growth priorities
- Compliance teams monitor implementation
Accountability now clearly rests at the top.
What Policyholders Should Expect Going Forward
As regulatory reforms take effect, customers should gradually experience:
- Clearer product explanations
- Better disclosure of costs and commissions
- Reduced pressure selling
- Improved post-sale support
While regulatory change takes time, the direction is firmly towards transparency and fairness.
Insurance Mis-selling in India: A Turning Point for the Industry
The current regulatory, legal, and governance developments signal a decisive turning point.
Insurance mis-selling in India is no longer being treated as an unavoidable side effect of growth. It is being addressed as a core risk that threatens consumer trust, industry credibility, and long-term penetration.
Entities that recognise this shift early—and align their sales, compliance, and governance frameworks accordingly—will define the next phase of sustainable insurance growth in India.
FAQ on Insurance Mis-selling in India
1. What does “insurance mis-selling” mean in India?
Insurance mis-selling occurs when an insurance product is sold without adequate explanation of key terms, exclusions, costs or suitability for the customer’s needs. It often involves misleading statements, false benefits or high-pressure selling tactics that result in the customer buying a policy that does not align with their financial goals or risk profile.
2. How can I tell if I have been a victim of insurance mis-selling?
You may have been mis-sold a policy if:
- Benefits promised verbally do not match the written policy
- You were told unrealistic returns or guarantees
- The policy was pushed without explaining risks or costs
- You feel the product is unsuitable for your financial needs
Keeping records of sales communication helps in identifying such cases.
3. What should I do first if I suspect mis-selling?
The first step is to raise a written complaint with your insurance company’s Grievance Redressal Officer (GRO), including all relevant documents like the policy contract, emails, receipts, and any notes from sales discussions. Give the insurer reasonable time (usually 15–30 days) to respond.
4. How do I file a complaint with IRDAI if my insurer doesn’t resolve the issue?
You can escalate unresolved complaints to the regulator through:
- IRDAI’s Bima Bharosa portal (https://bimabharosa.irdai.gov.in/)
- Toll-free helpline: 155255 / 1800 4254 732
- Email: complaints@irdai.gov.in
You may also send a physical letter to the IRDAI Grievance Cell in Hyderabad if required.
5. Is there a free-look period to cancel a mis-sold policy?
Yes. Most insurance policies in India come with a free-look period (usually 15 days from receipt of the policy document, extended to 30 days for online or distance sales). If you identify mis-selling within this period, you may cancel the policy and get a refund of premiums with minor deductions.
6. Can I get a refund if my insurance policy was mis-sold?
If mis-selling is proven, you may be entitled to a refund of the premiums paid. In some consumer forum cases, full refunds and compensation for additional costs have been awarded. The refund process usually begins with your insurer, followed by IRDAI grievance redressal or, if necessary, an insurance ombudsman and consumer court.
7. What is the role of the Insurance Ombudsman in mis-selling cases?
If your complaint involves an amount within the Ombudsman’s monetary jurisdiction (often up to ₹50 lakh), you may approach the Insurance Ombudsman free of cost after your insurer and IRDAI have had a chance to resolve it. Many disputes are successfully resolved at this level.
8. Can I approach the consumer court for mis-selling grievances?
Yes. If the issue remains unresolved through the insurer, IRDAI, or Ombudsman, you may file a complaint under the Consumer Protection Act, 2019 in a District, State or National Consumer Disputes Redressal Commission. This helps you seek compensation for unfair trade practices or financial loss arising from mis-selling.
9. Does mis-selling include unfair business practices (UFBP)?
Yes. Mis-selling is often categorised under Unfair Business Practices (UFBP) in the insurance sector. IRDAI tracks UFBP grievances as a key regulatory indicator of market conduct issues.
10. Can mis-selling occur in digital insurance sales?
Yes. Digital channels pose unique mis-selling risks, such as pre-selected options, lack of human explanation or complex product features presented without clarity. It is important to read policy terms carefully and ask questions before purchase.
11. Are banks and corporate agents also held accountable for mis-selling?
Yes. Banks, corporate agents, brokers and individual agents can all be held responsible if they sell unsuitable products or fail to disclose key terms. IRDAI and other regulators have repeatedly issued warnings to banks and intermediaries about mis-selling practices.
12. Is mis-selling only about sales tactics or also disclosure of commissions?
Mis-selling includes both unsuitable sales tactics and lack of transparent disclosure of costs, commissions, and incentive structures. Recent regulatory changes empower IRDAI to mandate clearer commission disclosures to enhance transparency and reduce conflict of interest in sales.
13. What evidence is required to prove insurance mis-selling in India?
To establish insurance mis-selling in India, policyholders should preserve documents such as proposal forms, benefit illustrations, policy brochures, premium receipts, recorded calls (if any), emails or WhatsApp messages exchanged with the salesperson. Even inconsistencies between verbal promises and written policy terms are considered relevant evidence during grievance evaluation.
14. Is verbal assurance by an insurance agent legally binding?
In most cases, verbal assurances are difficult to enforce unless supported by written or recorded evidence. Indian courts and grievance authorities rely primarily on the policy document and proposal form. This is why IRDAI repeatedly emphasises written disclosures and documented consent to reduce insurance mis-selling in India.
15. Can insurance mis-selling happen even if the proposal form is signed by the customer?
Yes. Merely signing the proposal form does not automatically absolve the seller. If it can be shown that critical details were not explained, were misrepresented, or were filled incorrectly without the customer’s informed understanding, it may still qualify as insurance mis-selling in India.
16. Are senior citizens more vulnerable to insurance mis-selling in India?
Yes. Senior citizens are among the most vulnerable groups, particularly for pension plans, annuities, and long-term savings-linked insurance products. Regulators closely scrutinise sales involving elderly customers, especially where complex products or high premiums are involved.
17. Does mis-selling apply only to life insurance policies?
No. Insurance mis-selling in India can occur across all segments—life, health, motor, general insurance, and even micro-insurance products. However, life insurance mis-selling attracts greater regulatory focus due to long policy tenures and higher financial impact.
18. What is the difference between poor service and mis-selling?
Poor service relates to delays or inefficiencies after policy issuance, such as claim delays. Mis-selling, on the other hand, relates to defects at the point of sale, including unsuitable product recommendation, misleading information, or lack of disclosure. IRDAI treats these as distinct grievance categories.
19. Can insurance mis-selling lead to penalties for insurers or intermediaries?
Yes. Proven cases of insurance mis-selling in India can result in:
- Monetary penalties
- Suspension or cancellation of agency/intermediary licences
- Mandatory corrective action plans
- Enhanced regulatory supervision
With new legal amendments, IRDAI’s enforcement powers have become significantly stronger.
20. How does commission-driven selling contribute to mis-selling?
When sales incentives are heavily skewed towards higher commissions, sellers may prioritise products that earn more rather than those suitable for customers. This structural issue is one of the primary drivers of insurance mis-selling in India and is now being directly addressed through commission regulation reforms.
21. Are insurers responsible for mis-selling done by agents or banks?
Yes. Under Indian insurance law, insurers are ultimately responsible for the conduct of their appointed agents, corporate agents, and bancassurance partners. IRDAI expects insurers to implement robust oversight and monitoring mechanisms across all distribution channels.
22. What role does the free-look cancellation play in reducing mis-selling?
The free-look period acts as a safety valve, allowing customers to exit a policy after reviewing its terms. While helpful, regulators believe free-look alone cannot eliminate insurance mis-selling in India unless sales quality improves at the source.
23. Can digital consent replace physical signatures in mis-selling disputes?
Digital consent is legally valid, but only if it is informed and explicit. Pre-ticked boxes, unclear consent screens, or bundled approvals may still attract scrutiny if mis-selling is alleged.
24. What changes should customers expect after IRDAI’s recent warnings?
Customers can expect clearer disclosures, better explanation of costs, reduced pressure selling, and more accountable grievance handling. Over time, these measures are expected to significantly reduce insurance mis-selling in India.
25. Is mis-selling considered a criminal offence in India?
Mis-selling is generally treated as a regulatory and consumer protection issue rather than a criminal offence. However, in cases involving fraud, forgery, or deliberate deception, criminal proceedings may also be initiated under applicable laws.
26. How long does it usually take to resolve a mis-selling complaint?
Resolution timelines vary. Insurers typically respond within 15–30 days. Escalation to IRDAI or the Ombudsman may take a few additional weeks or months, depending on complexity. Strong documentation significantly speeds up resolution.
27. Can a lapsed policy be revived if it was originally mis-sold?
Revival is possible, but if the policy was fundamentally unsuitable due to mis-selling, customers are advised to pursue grievance redressal instead of revival. Each case depends on facts, timelines, and policy conditions.
28. What is IRDAI’s long-term objective in curbing insurance mis-selling in India?
IRDAI’s objective is to shift the industry from transaction-driven sales to trust-based protection. Reducing insurance mis-selling in India is central to improving penetration, persistency, and long-term financial security for households.
29. How can customers protect themselves from insurance mis-selling?
Customers should:
- Avoid rushed decisions
- Insist on written explanations
- Compare products independently
- Read benefit illustrations carefully
- Ask clear questions about lock-in, returns, and charges
Informed customers are the strongest defence against mis-selling.
30. Why is insurance mis-selling in India being discussed so strongly now?
Rising grievance data, stagnant insurance penetration, and declining trust have pushed regulators to act decisively. The current phase marks a structural reset of insurance sales governance rather than a temporary corrective measure.
31. Can insurance mis-selling in India happen during policy renewal as well?
Yes. Insurance mis-selling in India can also occur at the renewal stage, especially when customers are persuaded to switch policies unnecessarily, upgrade coverage without need, or renew without being informed of revised terms, exclusions, or premium increases.
32. Is mis-selling more common in ULIPs and investment-linked insurance products?
Historically, mis-selling complaints have been higher in ULIPs and savings-oriented life insurance products due to complexity, long lock-in periods, and return expectations. However, IRDAI has clarified that insurance mis-selling in India is not product-specific and can occur across all insurance categories.
33. Can mis-selling occur even if the policy eventually gives benefits?
Yes. Even if a policy delivers some benefits, it may still qualify as mis-sold if the product was unsuitable, risks were concealed, or the customer’s consent was not fully informed at the time of sale. Suitability and disclosure are assessed at the point of sale, not retrospectively.
34. Are recorded sales calls mandatory to prevent mis-selling?
While not mandatory in all cases, call recordings are strongly encouraged, especially for tele-sales and digital sales. Recorded confirmations help insurers demonstrate informed consent and are increasingly relied upon in resolving insurance mis-selling in India complaints.
35. How does IRDAI monitor mis-selling trends in the market?
The Insurance Regulatory and Development Authority of India monitors mis-selling through:
- Grievance data and UFBP trends
- Persistency ratios
- Market conduct inspections
- Supervisory filings from insurers and intermediaries
This data-driven oversight helps identify systemic risks early.
36. Can insurers deny mis-selling allegations by citing customer declarations?
Customer declarations are relevant but not absolute. If evidence shows that declarations were obtained without proper explanation or were filled inaccurately by sales personnel, regulators may still treat the case as insurance mis-selling in India.
37. Is bancassurance more prone to mis-selling compared to other channels?
Bancassurance has attracted higher regulatory attention because customers often perceive bank staff as advisors rather than salespersons. Bundling insurance with loans or deposits without clear consent has been a recurring trigger for insurance mis-selling in India complaints.
38. What happens if mis-selling is detected repeatedly in a particular branch or channel?
Repeated mis-selling patterns may lead to:
- Enhanced supervision
- Mandatory retraining
- Restrictions on sales activities
- Penalties or licence action in serious cases
IRDAI expects insurers to act decisively once patterns are identified.
39. Can mis-selling affect an insurer’s future product approvals?
Yes. Persistent market conduct issues, including mis-selling, can impact an insurer’s regulatory standing. This may influence regulatory approvals, supervisory intensity, and the speed at which new products are cleared.
40. Will stricter regulation completely eliminate insurance mis-selling in India?
Regulation can significantly reduce mis-selling, but complete elimination depends on ethical sales culture, informed customers, and strong governance. The current regulatory reforms are aimed at making insurance mis-selling in India increasingly difficult, detectable, and penalised—thereby restoring long-term trust in the sector.
IRDAI on Insurance Distribution: Regulator Focuses on Awareness Over Mandates
