India’s insurance regulator is focusing on acquisition costs and mis-selling in the context of efforts to make coverage more affordable and to respond to emerging grievance patterns in health and life insurance. At the “InsureInd” conference organised by the Confederation of Indian Industry, Insurance Regulatory and Development Authority of India (IRDAI) member (non-life) Deepak Sood said insurers need to scrutinise the value created by each product and distribution channel amid rising cost pressures. “The high cost of acquisition and high expenses of management (EoM) need immediate focus from all players. That is critical to improve profitability and deliver affordability and value to customers,” Sood said, as reported by The Economic Times.

Sood’s remarks follow the Economic Survey for FY 2025-26, which identified growing acquisition and administrative expenses as a structural issue for the sector and pointed to a high-cost distribution model as one reason insurance penetration remains modest despite steady premium growth. He also directly addressed sales conduct, saying mis-selling has weakened trust and harmed outcomes for both policyholders and companies. “Selling correctly is an imperative for every salesperson, distributor, and insurance company,” he said.

Affordability and protection gaps in the ‘missing middle’

A central theme in Sood’s comments was the need to improve access for India’s “missing middle” – households that fall between low-income groups covered by public schemes and higher-income customers served by traditional retail channels. He noted that many of these households are not covered by government-backed initiatives such as Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana and continue to face difficulty in securing adequate health protection. Against that backdrop, he indicated that product pricing, benefit structures and distribution approaches may need to be reassessed if the industry is to address these protection gaps.

Sood said the sector should assess progress not only through premium growth but also through movement toward universal and meaningful protection in life, health, and property lines by 2047. He linked penetration to practical affordability rather than headline ratios alone. “Affordability, accessibility, and awareness must form the three pillars of growth,” he said, adding that the premium-to-GDP ratio will change in a durable way only when these factors are aligned for ordinary households. To support product development, IRDAI has widened the scope of its “use and file” framework, which allows insurers to introduce products without prior approval, subject to regulatory norms. The framework is intended to reduce time-to-market while maintaining supervisory oversight, according to the authority.

Grievance data show complaint clusters in stand-alone health

Alongside the focus on costs and sales conduct, recent data from the Council of Insurance Ombudsman (CIO) and IRDAI for FY 2024-25 show how complaints are distributed across the health segment, with stand-alone health insurers prominent in the statistics. The CIO’s Annual Report 2024-25, covering both carried-forward and new cases, shows that Star Health & Allied Insurance Co. Ltd recorded 12,186 complaints during the period. Care Health Insurance Ltd followed with 4,423 complaints, Niva Bupa Health Insurance Co. Ltd with 3,983, and Aditya Birla Health Insurance Co. Ltd with 2,354. National Insurance Co. Ltd was the only public-sector insurer among these leading entities by complaint volume, with 1,890 complaints.

When these figures are combined with covered-lives data from the IRDAI Handbook on Indian Insurance Statistics 2024-25 and converted into complaints per 100,000 persons insured, notable differences appear between stand-alone health and composite players. Star Health’s 12,186 complaints across 23.78 million insured persons equate to around 51 complaints per 100,000 lives, the highest ratio in the CIO table. Care Health’s 4,423 complaints for 25.549 million covered lives work out to roughly 17 per 100,000, while Niva Bupa’s 3,983 complaints for 21.675 million lives translate into about 18 per 100,000. Aditya Birla Health’s 2,354 complaints across 18.962 million insured persons result in approximately 12 per 100,000.

For large public-sector and composite insurers with substantial health portfolios, the normalised ratios are lower. National Insurance’s 1,890 complaints across 40.731 million lives amount to around five complaints per 100,000 policyholders. The New India Assurance Co. Ltd reported 1,706 complaints for 80.847 million covered lives, or about two per 100,000, similar to ICICI Lombard General Insurance Co. Ltd, which logged 974 complaints across 40.899 million lives. HDFC Ergo General Insurance Co. Ltd registered 1,542 complaints linked to 15.654 million lives, or around 10 per 100,000, while The Oriental Insurance Co. Ltd reported 1,456 complaints for 14.790 million covered lives, also about 10 per 100,000.

United India Insurance Co. Ltd, which reported the largest number of persons covered in the table at 168.779 million, recorded 876 complaints, equivalent to roughly one complaint per 100,000 policyholders – the lowest ratio among the insurers listed. The covered-lives data span government schemes, group arrangements and individual policies, and the ratios are derived by dividing total complaints by persons insured and multiplying by 100. For health insurers across Asia, these Indian data provide an example of how normalising by covered lives can alter comparisons between stand-alone health carriers and multi-line insurers when assessing complaint incidence.

Mis-selling share rises within life insurance complaints

In the life segment, IRDAI’s Annual Report 2024-25 points to relatively stable total complaint volumes but a change in their composition, with mis-selling and unfair business practice cases accounting for a larger share. Complaints classified as unfair business practices increased to 26,667 in FY 2024-25 from 23,335 in FY 2023-24, a rise of about 14% year on year. Their share of total complaints against life insurers rose to 22.14% from 19.33%, indicating a higher proportion of matters involving product sales, explanations, and servicing. In its commentary, IRDAI describes mis-selling as “a significant concern that involves the sale of insurance products to consumers without proper disclosure of terms, conditions, or suitability.” The regulator says insurers are expected to move beyond case-by-case resolution and examine recurring causes.

“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,” the report states. The data indicate that survival benefit claims, policy servicing disputes and unfair business practices together account for a substantial portion of life insurance grievances. Products combining protection with savings or investment elements appear frequently in these cases, raising ongoing questions for the market around suitability assessments, disclosure practices, and intermediary compensation structures.

Intermediated distribution and conduct risk concentration

IRDAI’s analysis also highlights the distribution profile of India’s life market, which remains largely intermediated and bank-led. Corporate agents, including bancassurance partners, accounted for nearly 53% of private life insurers’ individual new business premium in FY 2024-25, with banks alone contributing more than 49%. Direct channels generated just over 10% of individual new business premium, while online channels and web aggregators together represented less than 1%. This distribution structure places a significant share of conduct and suitability risk at the point of sale within bank and corporate agent networks rather than through direct or digital models. For insurers and supervisors, that places emphasis on controls, training, incentives, and monitoring in intermediated channels as key components of mis-selling risk management.

Grievance handling positioned within culture and risk oversight

IRDAI has also linked complaint handling to wider culture and risk frameworks, rather than treating it purely as a compliance obligation. At a Nov. 26 meeting with chief compliance officers (CCOs) and grievance redressal officers (GROs) from all insurers, attended by insurance ombudsmen from Bhopal and Thane, the regulator discussed trends in escalated disputes and operational challenges. Opening the session on India’s Constitution Day, IRDAI chair Ajay Seth emphasised the role of trust in policyholder relations and the importance of compliance and grievance teams across the product life cycle. “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 said. Seth described CCOs and GROs as the “conscience and credibility” of insurance companies.

IRDAI has asked insurers to distinguish clearly between service requests and complaints to avoid misclassification, reinforce systems that support timely resolution, and use grievance data as input into risk assessments rather than relying on it solely for reporting. For insurance professionals across Asia, India’s recent data releases and regulatory statements offer insight into how cost structures, complaint metrics, and sales conduct expectations are influencing supervisory engagement in a major regional market.