Individual salespersons should be linked to every insurance policy: IRDAI
What's the story
Ajay Seth, the chairman of the Insurance Regulatory and Development Authority of India (IRDAI), has proposed an approach to combat mis-selling in the insurance sector. He suggested that every policy should be traceable back to an individual point of sales person (POSP), agent, or salesperson. The proposal was made at the silver jubilee conclave of the Insurance Brokers Association of India (IBAI) in New Delhi on Saturday.
Accountability gap
Database of individual salespersons needed
Seth highlighted a major gap in the current system where only intermediaries like banks or insurance brokers are identified, not the individual who advised and sold the policy.
He said, "At present, such a database does not exist."
The issue is particularly prevalent in bancassurance and broker-led sales.
To address this gap, Seth highlighted the proposed Public Insurance Registry as a solution to enhance transparency and accountability across the insurance distribution chain.
Complaint scrutiny
Seth urges insurers to examine customer complaints
Seth also urged insurers to closely examine customer complaints to pinpoint failures in the system.
He said, "Identify who went wrong in the system. I accept that not every grievance will be genuine. But if a complaint is found to be genuine, those responsible must be held accountable."
The IRDAI chief emphasized due diligence while hiring POSPs as they are directly dealing with customers and their history should be visible when they switch jobs.
Complaint surge
Complaints over unfair business practices on the rise
The push for individual accountability comes as complaints over unfair business practices are on the rise.
According to IRDAI's annual report, grievances against life insurers under this category rose 14% year-on-year to 26,667 in FY25.
Such complaints accounted for 22.14% of all grievances against life insurers during the year, up from 19.33% in FY24.
Vision clarity
Revamp incentive structures, IRDAI chief urges insurers, intermediaries
Seth clarified that IRDAI's vision of "Insurance for All" isn't just about increasing premium collections but also making insurance available, accessible, and affordable across income groups and regions.
He urged insurers to develop products for the underserved and uninsured segments of society.
The IRDAI chief also called on insurers and intermediaries to revamp incentive structures so they reward suitable advice rather than just driving sales volumes.
Consent clarity
Seth calls for transparency in customer interactions
Seth stressed on the need for transparency in every customer interaction and that informed consent should be more than a legal formality.
He criticized the use of "dark patterns" on insurers' websites and apps, saying customers shouldn't be forced to share personal information just to compare products or get quotes.
Earlier this year, IRDAI had asked insurers to conduct self-assessments for dark patterns.