What is misselling in the Indian insurance sector according to Irdai?

Misselling is selling insurance policies to consumers without fully disclosing terms, conditions, or suitability for their needs.

How are unfair business practices impacting Indian insurance grievances?

The share of unfair business practice grievances increased to 22.14% in FY25, indicating a rise in such issues.

What is the current insurance penetration in India compared to the world?

India's insurance penetration is 3.7%, which is considerably lower than the global average of 7.3%.

Home / Business and Economy / Irdai Warns: Insurance Misselling Soars, Policy Lapses Rise

Irdai Warns: Insurance Misselling Soars, Policy Lapses Rise

4 Jan

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Summary

Unfair business practices in insurance rose to 22.14% in FY25.
Insurance penetration remained static at 3.7%, below global average.
Insurance density saw a modest rise to $97 per capita in FY25.

Irdai Warns: Insurance Misselling Soars, Policy Lapses Rise

The Insurance Regulatory and Development Authority of India (Irdai) has highlighted misselling as a significant issue within the insurance sector. In fiscal year 2024-25, grievances related to unfair business practices (UFBP) increased to 26,667, representing 22.14% of total complaints, up from 19.33% in the prior year. This trend is concerning as misselling, which involves selling policies without proper disclosure, often results in policyholders facing higher premiums and subsequently lapsing their policies.

To combat this, Irdai has advised insurers to implement strategies such as assessing product suitability and enhancing controls within distribution channels. A root cause analysis of misselling grievances is also recommended periodically. Despite these concerns, the overall insurance penetration in India remained static at 3.7% for FY25, lagging behind the global average of 7.3%. Life insurance penetration even saw a slight decline to 2.7%.