Insurance Mis-selling Continues Despite Tighter Rules, Warns Expert

Shilpa Arora, Chief Operating Officer and Co-Founder of Insurance Samadhan, has highlighted that insurance mis-selling remains a significant issue in India, even with improved regulations. Common deceptive practices include presenting policies as "interest-free loans" or offering refunds with bonuses on lapsed policies. Tele-callers frequently lure individuals with false promises, such as high investment returns, free health insurance, job opportunities, travel benefits, or guaranteed income, leading consumers to purchase products they neither need nor understand.

The persistence of mis-selling is attributed to sales incentives that prioritize meeting targets over transparency and the fact that many customers do not thoroughly read or comprehend the fine print of policies. Misleading telemarketing, third-party data breaches, and emotional selling tactics exploit this gap in customer understanding.

Consumers are advised to protect themselves by identifying common red flags, such as promises of interest-free loans, guaranteed high returns, or refunds on old policies. Arora recommends verifying the caller's identity through the insurer's official website, never sharing One-Time Passwords (OTPs) or policy details, and avoiding purchases from unsolicited calls. Genuine insurance sales are transparent, documented, and not rushed.

Insurers and intermediaries are urged to shift from target-driven sales to trust-based practices, emphasizing need analysis, full disclosure, and product suitability. Arora calls for stricter enforcement, accountability, and enhanced customer awareness, suggesting that deeper reforms like rigorous intermediary verification and real-time audits are crucial for lasting change.

**Impact** This news significantly impacts the Indian insurance sector by highlighting persistent regulatory challenges and consumer trust issues. It could lead to increased scrutiny from regulators like the Insurance Regulatory and Development Authority of India (IRDAI), potentially resulting in stricter guidelines and higher compliance costs for insurers. For investors, this may affect profitability for insurers with poor compliance records and dampen overall sector sentiment. Consumer confidence in insurance products could also decrease, impacting sales volumes. **Rating**: 7/10

**Difficult Terms** * **Mis-selling**: Selling a financial product to customers using deceptive or misleading information, or selling a product that is not suitable for the customer's needs. * **Premium**: The amount of money an individual or business must pay for an insurance policy. * **Tele-callers**: Individuals who make sales calls or conduct surveys over the telephone. * **Lapsed Policies**: An insurance policy that has ended because the policyholder failed to pay the premium by the due date. * **Intermediaries**: A third party that acts as a link between two other parties, such as insurance agents or brokers who connect customers with insurers. * **OTP (One-Time Password)**: A unique, time-limited code sent to a user's registered mobile number or email address, used for verifying identity during online transactions. * **Need Analysis**: A process to understand a customer's financial situation, goals, and risks to determine the most suitable insurance products for them.