Mis-selling in insurance sector significant concern: Irdai

Key Highlights

• Mis-selling involves the sale of insurance products to consumers without proper disclosure of terms, conditions or suitability.
• "To prevent or reduce mis-selling, insurers have been advised to implement strategies, such as assessing product suitability, implementing distribution channel-specific controls and developing a plan to address mis-selling grievances, including carrying out a root cause analysis on a periodic basis," Insurance Regulatory and Development Authority of India (Irdai) said in its annual report 2024-25.
• The Finance Ministry has repeatedly cautioned banks and insurance companies against the mis-selling of insurance policies to customers, emphasising the importance of upholding corporate governance best practices.
• Mis-selling often leads to higher premiums for customers, and as a result, policyholders don't renew their policy, resulting in a rise in lapse cases.
• About insurance penetration, the report said it remained static at 3.7 per cent in FY25.