The mis-selling of insurance policies, encompassing life, health, motor, property, and other types of coverage, is a frequent reality. It is not uncommon for insurance agents or representatives to withhold crucial information regarding policy exclusions and limitations. Furthermore, there are instances where they may aggressively promote certain policies over others in order to achieve their sales targets.
In October 2023, the Insurance Regulatory and Development Authority of India (IRDAI) “formed a taskforce to look into various aspects of the bancassurance channel, including mis-selling”.
This year, the Department of Financial Services (DFS), which falls under the Finance Ministry, warned public sector banks against mis-selling insurance products to customers, urging them to protect the interest of account holders. DFS said it has been getting regular complaints regarding fraudulent and unethical practices being adopted by banks and life insurance companies for procuring policies from customers, said Financial Services Secretary Vivek Joshi
His remarks came as some banks allegedly make customers buy insurance products when they approach for loans or term deposits. In some cases, life insurance policies were sold to customers aged above 75 years in tier-II and tier-II cities.
A recent survey by Local Circles stated that 61% users of online insurance sales/ service platforms surveyed who purchased an insurance policy experienced a subscription trap where the platform made it difficult for them to cancel it.
The survey said of the total responses, 27% of consumers who bought a policy through an online platform stating “very frequently” they experienced a subscription trap, 34% stated “sometimes” and 12% stated “rarely”.
Only 15% of the consumers surveyed state “never” have they faced the problem while 12% of respondents did not give a clear response. To sum up, 61% users of online insurance sales/ service platforms surveyed who purchased an insurance policy experienced a subscription trap where the platform made it difficult for them to cancel it.
About 86% users of online insurance sales/ service platforms surveyed said the platforms frequently used a nagging approach when they take an insurance quote or attempt to cancel a policy.
The survey said 49% of consumers stated that they have “very frequently” faced a nagging approach with online insurance sales/ service platforms; 37% stated this has “sometimes” happened with them while 14% stated that they have “rarely” experienced it. To sum up, 86% users of online insurance sales/ service platforms surveyed said the platforms frequently used a nagging approach when they take an insurance quote or attempt to cancel a policy.
Around 57% of respondents said platforms frequently used a forced action by seeking unnecessary personal details to provide a quote and sending unsolicited
information or misusing the personal details.
Forced action is one of the most common dark patterns used by online platforms to get unnecessary personal details. The survey stated 32% of the consumers who responded that they have faced a forced action approach “very frequently”; 25% indicated they had faced such a situation “sometimes” and 18% stated “rarely”. The remaining 25% of respondents stated they have “never” faced this problem.
To sum up, 57% users of online insurance sales/service platforms surveyed said platforms frequently used a forced action by seeking unnecessary personal
details to provide a quote and sending unsolicited information or misusing the personal details.
It is to be noted that the government via the Central Consumer Protection Authority (CCPA) notified prohibition on 13 types of dark patterns in November 2023. These include false urgency, basket sneaking, confirm shaming, forced action, subscription trap, interface interference, bait and switch, drip pricing, disguised advertisement, nagging, trick questions, SaaS (software as a service) billing and rogue malwares. Per the CCPA notification, dark patterns amount to misleading advertisement or unfair trade practice or violation of consumer rights.