IRDAI targets dark patterns with nine-month audit drive across insurance industry
July 1, 2026
Regulator flags hidden nudges in policy sales and says Bima Sugam products are set to roll out by September
The Insurance Regulatory and Development Authority of India (IRDAI) plans to step up its scrutiny of “dark patterns” in the insurance industry. In a move that signals a tougher regulatory oversight, the industry regulator has roped in the Institute of Public Auditors of India to independently study and monitor such practices.
“From the authority, when we sent a letter to all of you to check up on dark patterns, almost all have said they don’t have dark patterns. With that kind of a response, we have reached out to the Institute of Public Auditors of India to take up the study and also monitor over a period of nine months who has got dark patterns and who has not,” IRDAI chairman Ajay Seth said on Tuesday at a public awareness initiative organised by the Insurance Awareness Committee of the Life Insurance Council.
Dark patterns refer to manipulative design features in digital interfaces or sales processes that nudge, pressure or mislead consumers into making decisions that primarily benefit companies while appearing legitimate.
In April, IRDAI had directed all regulated entities to conduct a self-assessment of their compliance with norms on dark patterns and submit reports to the regulator. However, the responses appear to have fallen short of the regulator’s expectations.
Seth pointed to the practice of insurers insisting on collecting personal information before providing a simple premium quote.
“Product discovery is hidden behind the walls of personal information,” he said, adding that such practices create unnecessary friction and erode trust among prospective policyholders.
Industry observers say dark patterns can take several forms, including pre-ticked add-on riders that increase premiums without adequate disclosure, guilt-inducing language that discourages customers from opting out during the free-look period, nudging buyers towards higher-commission products or burying key charges and exclusions deep within lengthy policy documents.
Addressing such practices could be critical to improve insurance adoption in India, where penetration remains well below global averages.
According to a Swiss Re report, insurance penetration in India stood at 3.7 per cent in FY25 compared with the global average of 7.3 per cent. Insurance density, measured as annual premium per capita, was $97 in India against the global average of $943.
While the life and general insurance industries grew by 15.7 per cent and 9.3 per cent, respectively, in FY26, insurers are increasingly competing with mutual funds and equities for household savings. Industry estimates point to a more moderate growth trajectory in FY27, with life insurers expected to grow 8-11 per cent and general insurers posting high single-digit growth.
Foreign interest
Seth said the recent increase in the foreign direct investment limit in insurance has begun attracting overseas players.
The regulator has already approved the licence of one foreign general insurer, while another foreign general insurer is awaiting IRDAI approval to enter the Indian market, he said, without disclosing their identities.
He also said the first set of products is expected to become available on the Bima Sugam digital marketplace by the end of September. The platform, whose website was launched last September, is envisaged as a unified digital marketplace connecting insurers, intermediaries and customers on a single interface.
[The Telegraph]
