INSURANCE
Mis-selling in insurance sector significant concern: IRDAI
Jan-06-2026

Insurance Regulatory and Development Authority of India (IRDAI) in its latest annual report has said that insurers need to conduct a root cause analysis of mis-selling to identify the underlying causes as mis-selling is a significant concern in the insurance sector. 

In 2024-25, the total number of grievances registered against life insurers remained almost the same at 1,20,429 as against 1,20,726 in 2023-24. However, total number of grievances registered under Unfair Business Practices (UFBP) has increased to 26,667 in 2024-25 from 23,335 in 2023-24. Further, the share of UFBP grievances to total grievances has increased to 22.14% in FY25 compared to 19.33% in FY24.

Mis-selling involves the sale of insurance products to consumers without proper disclosure of terms, conditions or suitability. To reduce mis-selling, insurances companies have been directed 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.  

The report stated that insurance penetration remained static at 3.7% in FY25. This is much below the world's average of 7.3%. The insurance penetration for the life insurance industry declined to 2.7% during 2024-25 from 2.8% in 2023-24. Besides, in 2024-25, the insurance density in India showed a modest rise, increasing from $95 in 2023-24 to $97 in 2024-25. Insurance penetration and density are two metrics often used to assess the level of development of the insurance sector in a country.

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