IRDAI’s New Framework to Eliminate Dark Patterns in Insurance: Explained

The Insurance Regulatory and Development Authority of India (IRDAI) has partnered with the Institute of Public Auditors of India (IPAI) to identify and monitor the dark patterns in the insurance sector. This move aims to curb the misselling, improve transparency, strengthen consumer protection and restore the trust in the digital insurance platforms.

Why IRDAI Is Taking Action

In the insurance industry, mis-selling is the persistent issue with the insurers, brokers, agents, and banks often uses misleading sales tactics to sell their complex insurance products.

TO address this concern, IRDAI is tightening regulations on dark patterns, it designs practices which manipulate consumers to making decisions they might not otherwise choose.

The regulator believes that by eliminating such practices will make insurance more transparent, trustworthy, and consumer-friendly.

What Are Dark Patterns?

Dark patterns are deceptive website or app designs which directly influence users into those actions which they did not intend.

Common examples includes,

• Asking for the excessive personal information before showing insurance products.
• Hiding policy details or charges behind the multiple screens.
• Making policy cancellation difficult.
• Automatically selecting add-on products.
• Sending repeated spam calls and also promotional messages.
• Concealing important terms and conditions.

These practices reduces the informed consumer choice and it contributes to insurance mis-selling.

IRDAI’s New Measures

To tackle this rising issue, IRDAI has also announced several initiatives such as,

• Partnered with the Institute of Public Auditors of India (IPAI) to independently monitor these dark patterns.
• The monitoring exercise will continue for the period of nine months.
• Earlier, in the April 2026, IRDAI has also directed all the insurers to conduct a self-assessment of dark patterns.
• Most insurers has reported that they did not use such practices, prompting the regulator to seek the independent audit.

The study will identify those companies which are using manipulative digital practices and recommend the corrective measures.

Concern Raised by IRDAI Chairman

IRDAI Chairman Ajay Seth has highlighted that many insurance websites demands the large amounts of personal information before it allowing customers to view their products or compare prices.

According to him, consumers should be able to,

• Compare insurance products easily.
• View pricing without facing unnecessary barriers.
• Understand policy features clearly.
• Also make informed purchasing decisions without any manipulation by providers.

He also stressed that consumer trust is essential for the expanding insurance penetration in the country.

Upcoming Insurance Distribution Reforms

IRDAI is expected to release a consultation paper in the month of July 2026 and proposing broader reforms to insurance distribution.

The proposed reforms are likely to includes the.

• Measures to reduce insurance mis-selling.
• Greater transparency in the insurance sales.
• Changes to the commission-based distribution model.
• Will introduce stronger consumer protection guidelines.
• Better disclosure with the set standards across digital platforms.

These reforms aims to make insurance sales more ethical and customer-centric.

Link with RBI’s Consumer Protection Framework

IRDAI’s initiative follows the Reserve Bank of India’s (RBI) framework to curb the mis-selling of the financial products by banks which will be effective from 1st of January, 2027.

Since many banks also sell the insurance products, IRDAI plans to introduce the similar safeguards specifically for insurance distribution.

How Serious Is the Problem?

As per the LocalCircles survey which involves over 87,000 respondents,

• Around 80% people have experienced hidden charges, forced data sharing, or difficulty cancelling insurance policies.
• Nearly 90% has also reported receiving repeated undefined calls and promotional messages which are encouraging them to purchase or continue policies.

The survey has covered the major digital insurance platforms and indicating that deceptive practices are widespread across the industry.