(L to R)-R Venkatachalam Iyer, MD & CEO Tata AIA, Amit Jhingran, MD & CEO SBI Life, Piyush Pandey, advertising professional, Swaminathan Iyer, member, Life, IRDAI, Kamlesh Rao, MD&CEO,ABSLI, RK Patnaik, MD, LIC, Rushabh Gandhi, MD&CEO India First at an event in Mumbai to launch life insurance industry’s multimedia awareness campaign
However, the IRDAI will now keep an eye on mis-selling by insurance companies through banks on case to case basis as it has found out that such cases in bancassurance channel is not very high, sources said.
Mumbai: In a change of mind, the Insurance Regulatory and Development Authority of India (IRDAI) had dropped its earlier plan to bring in new bancassurance rules for reducing mis-selling by banks, which have insurance subsidiaries.
Speaking at the event for unveiling Indian life insurance industry’s Rs 450 crore three-year multimedia awareness campaign with the theme ‘Sabse Pehle Life Insurance, Irdai’s member (life) Swaminathan Iyer said mis-selling in the life insurance sector is not alarming and going by the available data around 0.41 per cent in 100 policies are mis-sold.
However, the IRDAI will now keep an eye on mis-selling by insurance companies through banks on case to case basis as it has found out that such cases in bancassurance channel is not very high, sources said.
Earlier, IRDAI was concerned about the heavy reliance of insurance companies on their parent banks for bancassurance business.
Earlier, IRDAI had almost decided to bring regulations for curbing over dependence on bancassurance at parent bank.
The proposed regulations would have forced insurance companies to tie-up with more banks for reducing dependency on the parent bank and diversify across multiple channels to ensure balanced growth.
The insurance regulator has been raising concerns over parent banks selling 90% of subsidiary insurers.
Iyer further said India is still the 10th largest market in the world from a penetration perspective, but it has a long way to go.
He said only about 36 crore of the 140 crore people have a cover at present,
The migration to and out of big cities exposes people to financial vulnerabilities, which make insurance necessary, said Iyer.
“We will spend at least Rs 150-160 crore per year, and we have commitments lined up to run the campaign at least for three years,” said Kamlesh Rao, chairman of the Insurance Awareness Committee
The life insurers will have contributions from all life insurance players on the basis of their premium incomes..
It can be noted that the penetration of insurance has dipped for the last few years, and the overall premium collected by companies stands at 3.2 per cent of GDP in FY25 against 4 per cent in FY23 and 3.7 per cent in FY24.
A survey done by the council also revealed that while people are aware and have taken cover, it may be inadequate for them.
The campaign focuses on term, child and savings plans initially and also includes other aspects.
Replying to a question on whether the watchdog is mulling allowing insurers to invest in gold exchange-traded funds, Iyer said that Irdai looks at all requests that are made, and the interests of policyholders and the growth of the industry are of importance to it.
India continues to grapple with a significant life insurance protection gap—one that has risen from 83% in 2019 to 87% in 2023, The gap is even more pronounced among those aged 18–35, exceeding 90%. This growing vulnerability poses a serious threat to families’ financial security and aspirations.
Massive campaign to create insurance awareness by IRDAI wil have visible impact on the penetrative of life insurance. This should be supported by dynamic grievance redressal system through easy access by the policyholdersThe . Insurance being s long term financial provision it’s continuity depends upon timely response to various requirements of the policy holder.
The IRDAI’s initiative for a massive insurance awareness campaign is a commendable step towards improving life insurance penetration in India. For this effort to achieve its full potential, it must be complemented by a robust and responsive grievance redressal mechanism that is easily accessible to policyholders. Given that insurance is a long-term financial commitment, sustained engagement and timely support are essential to ensure trust, policy continuity, and customer satisfaction.
IRDAI has hardly done any substantial work to address the grievance of victims of mis-selling. Although it was tried to defend through partial statistics.Financial crunch faced by the victim of mis-selling can only tell the truth. Why Bank promoted insurance companies depend only on sponsor bank and can not access the market directly. Not to talk about the unethical practices in the field.
IRDA unlike RBI is an extremely slack Regulator. If the bank authorities do not come forward and compels the insurance companies to compensate the aggrieved victim ,it would have been reduced to a pandemonium and free loot.
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Swaminathan Iyer said mis-selling in the life insurance sector is not alarming and going by the available data around 0.41 per cent in 100 policies are mis-sold. It seems that data has not been collected from policyholders of rural India. Out of four policy purchased from rural branch of Bihar all are mis-sold but IRDA is not able to help policyholders .write this by challenge swaminathan
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Challenging Swaminathan Iyer’s View on Life Insurance Mis-Selling
Swaminathan Iyer has stated that mis-selling in the life insurance sector is not alarming, citing data that suggests only 0.41% of policies are mis-sold. However, this conclusion appears disconnected from the ground reality, especially in rural India.
One major concern is the source and scope of the data being referenced. Has this data been collected from policyholders in rural areas—where financial literacy is often limited, and regulatory oversight weak? Based on firsthand experience from a rural branch in Bihar, out of four policies purchased, all four were mis-sold. That’s a 100% mis-selling rate in that small sample, vastly different from the claimed 0.41%.
Furthermore, policyholders from such regions often face significant hurdles in seeking redressal. Despite raising the issue with the Insurance Regulatory and Development Authority of India (IRDAI), no effective help was provided. This reflects a systemic failure not just in curbing mis-selling, but also in ensuring justice for the victims.
If such cases are not accounted for, then the statistics presented are not just misleading—they’re dangerous. They offer a false sense of trust in a system that, in many regions, fails to protect the very people it’s meant to serve.
It’s time policymakers and regulators look beyond numbers and listen to the voices from the ground. Mis-selling in rural India is not a minor issue. It’s a widespread problem that deserves serious attention, not statistical downplaying.
It appears that the IRDAI cited incorrect statistics regarding percentage of victims of mis-selling insurance policies. The authority must know how many policies are successfully running and how many are lapsed. Apparently, lapsed policies in India are either mis-sold fraudulently to the victims.
A new word has been coined – “Bancassurance”. It can be only found in his dictionary who has coined it.
Banking & selling insurance policies are absolutely two different activities and objectives. Operating both activities in same premises of a bank is not permissible in the eye of law. Chances of becoming a victim of mis-selling of insurance policies are more in banks. Because bank employees engaged in selling policies in banking hours have easy access to victims’ financial capabilities through respective bank accounts.
IRDAI must play a pivotal role for redressal of all lapsed policies in all insurance companies in India and return the hard earned money to the victims of mis-selling. Why insurance companies will enjoy sum of premiums of lapsed policies’
Not getting why the IRDAI wants to wait till the uncontrollable situation to come of mis- selling and then take the steps on it.
Because of this practice people are still not getting the confidence to trust on the actual advisors and puzzled if they should go for the insurance or not… wanted to buy though 😕
It will be in public interest if IRDA discloses the methodology adopted for determining and tracking the level of mis-selling of Life Insurance policies.
If it is based on some random sampling then the sample size and spread (geographical & policy size wise, channel wise) should be disclosed.
On the other hand if it is based purely on registered complaints of mis-selling, that also needs to be disclosed.
The Insurance Industry Must Sell Through Agency and Broka Channes,Moreover Insurance Companies Should Not Be Directly /Indirectly Control by banks.Web Aggregator Is 🆕 Nusance in Industry,Insurance Requires Consultation Process, Moreover Insurance Companies Not Allowed to Sell ULIP At All.
Each Financial Instrument is
Separate, Unique and Non Negotiable and Non Substiturable, The Combo/Combination/Bundled Must Not be Allowed. Insurance Solutions Must be Non Liquid by Design/Default.The Sole Focus Numbers of Unique Life Covered. The Present Mess is Horrible.
🆕 Products/Solutions Post 99%
Persistency of Old Policies Only
A low percentage of mis-selling complaints may not necessarily indicate a healthy insurance environment; rather, it could reflect a lack of awareness among policyholders of rural Bihar Jharkhand or ineffective grievance redressal mechanisms. This suggests that the Insurance Regulatory and Development Authority (IRDA) must intensify its efforts to build trust and transparency in the system. IRDA policymakers need to step out of their air-conditioned chambers and engage directly with ground realities, understanding the challenges faced by policyholders. Strengthening consumer education, improving accessibility to complaint mechanisms, and enforcing stricter regulations on insurers are vital steps to restore faith and ensure fair practices across the sector.
Mis selling of insurance policies by the banks are rampant.
Customers are forced to take insurance policies while applying for various loans or booking a locker etc.Even they are poaching other insurer’s prospective customers by withhelding the clearing of cheques drawn in favour of other insurer( particularly PSU insurer) for very prettty reason,thereby making contact with the customer to convince them to take a inferior quality product of the insurance company owned by that bank.
However,customers are not so aware and most of them compromise with the banks to keep good relationship with them considering their future banking activity and lodge no complaints.
This is the reason the IRDA figure of mis selling through bank assurance is so low.
However,with the new initiative IRDA should focus not only on awareness of adequate insurance coverage for every Indians but should also focus on educating them with the knowledge and information to lodge complaints easily against banks and insurance companies against forceful or misleading sale of insurance product.