Insurance Rules: Often when buying insurance, consumers are given a policy they don’t need. This is called mis-selling in the insurance world. Since long customers have been complaining that agents sell them wrong products for their own benefit. Now the insurance regulator IRDAI has decided to root out this huge problem.

IRDAI Chairman Ajay Seth has spoken openly about this entire matter in an interview given to the media. He clearly stated that the biggest reason for the miss selling is the huge commission that the agents get. While initially earning 40 to 50 percent commission, agents are more focused on closing their sales than selling the right product. The regulator has now come out with a new consultation paper aimed at benefiting policyholders.

Customers will benefit from reduced commissions

Ajay Seth clarified that the reduction in costs of insurance companies should directly benefit the consumers. After the implementation of the new scheme, customers will get better returns in life insurance. While in general insurance, the claim ratio will improve. Due to the reduction in costs for companies, the amount of insurance premium will decrease or at least its increase will be prevented. The first year commission will be reduced under the new rules. Instead, when the customer renews his policy, the remaining commission will be paid to the agent. Also, the agent will remain connected with the customer even after selling the policy.

A record of wrong policy sellers will be created

Simply reducing commissions is not enough to prevent mis-selling. IRDAI is going to prepare a public insurance registry. This will have a complete record of those distributors or agents who sell policies wrongly. So far customers only do their KYC. After the implementation of the new rules, consumers will also have the opportunity to know the complete history of their agent or supplier. If there are many complaints against an agent, people will be wary before taking a policy from him.

Insurance will be prohibited along with the loan

A major problem in the market is forced bundling. Many times, when you take a loan from a bank, you are forcibly tied to a life insurance policy. Ajay Seth has taken a strict stand on this and said that the lender can demand life insurance to protect him, but he cannot expect to earn a commission from the premium. If a package is offered, it should clearly reflect the benefits to the borrower.

A crackdown on dark patterns

Dark patterns are also widely used in the insurance sector. When a customer only wants to know the premium rate online, he is forced to give his mobile number. After this he starts getting promotional calls continuously. The IRDAI chairman said that insurance is a mass-market product. Its rate cannot be hidden behind a veil of personal information. When the price is not clear, it is the consumers who have to suffer. No company can force a customer to buy something they don’t want.

Ajay Seth has emphasized a very important point. He says that seven-eight years ago the insurance industry was doing better at lower costs. Earlier the cost of life insurance was 16.5 percent, which has now increased to more than 20 percent. Similarly, the cost of general insurance has also increased from 25 percent to 32 percent. Companies have to return to their good standing again. The regulator has released a consultation paper for all these changes. This will be followed by draft regulations. It is expected that these new rules may come into force from January 1, 2027 or April 1, 2027.