India’s insurance regulator has reported a further increase in mis-selling-related complaints, indicating ongoing conduct risks in the life segment even as overall grievance volumes remain relatively stable.

In its Annual Report 2024-25, the Insurance Regulatory and Development Authority of India (IRDAI) said grievances categorized under unfair business practices rose to 26,667 in FY25, from 23,335 in FY24, an increase of about 14% year on year. These cases represented 22.14% of total complaints against life insurers, up from 19.33% a year earlier. The figures show that while the total number of complaints against life insurers has not risen sharply, a larger share now relates to how products are sold, presented, and serviced.

Regulator defines mis-selling and calls for root cause analysis

IRDAI has set out its view of mis-selling in clear terms. In the annual report, the authority stated: “Mis-selling in the Indian insurance sector is a significant concern that involves the sale of insurance products to consumers without proper disclosure of terms, conditions, or suitability.” The regulator said insurers are expected to move beyond individual case resolution and use structured analysis to understand why mis-selling persists. According to the report, “Insurers are encouraged to tackle the problem of mis-selling by conducting a root cause analysis to identify the underlying causes. To prevent or reduce mis-selling, insurers have been advised 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.”

Life business and hybrid products remain at the centre of complaints

Life insurers account for most mis-selling-related grievances. IRDAI data show that complaints related to survival claims, policy servicing, and unfair business practices together formed a significant portion of life sector grievances in FY25. Products that combine protection with savings or investment features remain the most complaint-prone, reflecting ongoing questions over suitability checks, disclosure practices, and distributor incentives. Similar issues arise in other Asian markets where unit-linked and participating products make up a large share of retail life portfolios.

Intermediary-led distribution dominates life insurance sales

The report states that life insurance distribution in India remains largely intermediary-driven. Corporate agents, including bancassurance partners, accounted for nearly 53% of private life insurers’ individual new business premium in FY25. Banks alone contributed more than 49% of such premium. Direct channels accounted for just over 10% of individual new business premium at the industry level, while online and web aggregators together generated less than 1%. This distribution mix places much of the conduct and suitability risk at the point of sale in bank and corporate agent networks rather than in direct or digital channels.

Use of grievance platforms grows, but outcomes are mixed

On complaint handling, IRDAI reported greater use of centralized systems such as the Bima Bharosa portal and the IRDAI Grievance Call Centre. In FY25, 257,000 grievances were recorded on the Bima Bharosa portal, of which 120,000 related to life insurance and 137,000 to general and health insurance. Most cases were closed within the timelines prescribed by the regulator.

However, outcomes in unfair business practice cases were mixed. Of the mis-selling-related grievances disposed of in FY25, more than 15,000 were decided against policyholders, while around 11,400 were resolved fully or partly in their favour. The data indicate that although more complaints are being processed through formal channels, a substantial proportion of policyholders do not obtain the remedy they seek.

Governance measures and ongoing regulatory expectations

IRDAI’s framework to address mis-selling includes mandatory customer information sheets, free-look periods, suitability assessments for certain product types, and periodic root cause analysis of mis-selling complaints. Insurers must also maintain policyholder protection and grievance redressal committees and appoint designated grievance officers. The continued rise in mis-selling grievances, despite these measures, suggests that implementation at the point of sale and oversight of distribution practices remain important areas of regulatory attention. IRDAI has said it will maintain close oversight of unfair business practices as insurance penetration and distribution networks expand.

Meeting with compliance and grievance heads focuses on complaint handling

The regulator’s expectations were further outlined at a Nov. 26 meeting with chief compliance officers (CCOs) and grievance redressal officers (GROs) from all insurers, where IRDAI reviewed how companies classify customer contacts, manage complaints, and operate internal redressal systems. Insurance ombudsmen from Bhopal and Thane also briefed the authority on trends and operational challenges in escalated cases. Opening the meeting on India’s Constitution Day, IRDAI chair Ajay Seth linked constitutional values to industry conduct and said trust is central to the insurer–policyholder relationship. He said compliance and grievance functions are important across product, servicing, and claims stages.

The regulator asked insurers to distinguish clearly between complaints and service requests to avoid misclassification, strengthen systems to meet resolution timelines, and use grievance data as an input into risk management rather than treating it only as a compliance requirement. Seth told participants: “Compliance cannot be a department – it must be a mind-set. And grievance redressal cannot be the end of a process– it must be our early warning system. When in doubt, choose the customer. If we do that consistently, trust will follow, growth will follow, and the industry will stand stronger than ever.” He described CCOs and GROs as the “conscience and credibility” of insurance companies.