Why IRDAI has brought in a statutory body to curb dark patterns in insurance

4 min readMumbaiJul 2, 2026 10:46 AM IST

IRDAI in April had directed insurers to conduct a self-assessment on dark patterns and submit observations. (Magnific)

Mis-selling has long been a rampant problem in the insurance industry, with agents, brokers, and banks often accused of pushing complex products to unknowing customers. These players have also been known to use “dark patterns” to boost sales at the cost of credibility.

Regulator Insurance Regulatory and Development Authority of India (IRDAI) is now seemingly tightening regulations surrounding “dark patterns” across many of these digital insurance marketplaces in order to boost consumer trust.

“Dark patterns” refer to practices and deliberate mechanisms hidden in websites intended to manipulate users into sharing data or making choices they otherwise won’t usually make by pressurising or misleading them. Some examples include forcing users to provide personal information to view product offerings on websites, deliberately making it difficult for users to cancel subscriptions, and spam calling to push products.

“We need to look at it from their (consumer) perspective…to help make financial inclusion more understandable, more trusted, and more actionable. The keyword for me is more trusted,” said IRDAI Chairman Ajay Seth at an event in Mumbai on Tuesday.

IRDAI’s steps

The regulator has partnered with the statutory body Institute of Public Auditors of India to monitor dark patterns across the industry over a period of 9 months. This comes after the regulator in April had directed insurers to conduct a self-assessment on dark patterns and submit observations.

“From the authority, when we sent a letter to all of you to check up on dark patterns, almost all have said they don’t have dark patterns. With that kind of a response, we have reached out to the Institute of Public Auditors of India to take up the study and also monitor over a period of nine months who has got dark patterns and who has not,” Seth said at the event on Tuesday.

During his speech, he also noted how most insurers ask for loads of personal information from users before providing details about products. This leads to information being hidden behind complex processes, limiting product discovery and potentially driving away consumers who were “already on the fence” about getting insurance.

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“How do we communicate if people do not have a choice to go and know the products, the price, the performance? How do they take a decision?” Seth said.

“While we have not yet spoken to many industry players, what we understand is that insurers might face some short-term problems if the regulations are tightened. After all, we do not know exact figures for how much of their sales are contributed by dark patterns and mis-selling,” an analyst tracking the sector at a domestic brokerage said. “However, that impact will largely be inconsequential, and tighter norms would build trust for consumers and be good for the industry,” they added.

The regulator will be releasing a consultation paper on reforms to insurance distribution in July, which is expected to include steps to curb mis-selling across distribution channels, improve transparency, and tweak the existing commission-based distribution model of insurers.

These steps come after the Reserve Bank of India introduced a comprehensive framework to curb mis-selling of financial instruments by banks, which comes into effect from January 1. “I would like to acknowledge the good set of guidelines that the RBI has brought. They have done their piece. All those banks are also licensees of the insurance sector. Now it is our turn to bring in suitable guidelines for them,” Seth said on the matter.

How big is the problem?

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Dark patterns have plagued the industry since insurance moved into digital channels. It erodes trust and repels consumers who were already unsure about getting insurance.

According to a survey by Local Circles, a social media platform focusing on governance issues, around 80% of respondents said they faced issues such as hidden charges, difficulty in cancelling policies, and forced data sharing. Around 90% of the sample size of over 87,000 respondents said they were repeatedly bugged to continue or buy policies through unsolicited calls and messages.

The study covered some of the biggest digital insurance platforms in the country, such as Policybazaar, Acko, and Tata AIG among others, highlighting the widespread nature of the problem.