Over eight in ten users who purchased insurance policies through online platforms have experienced manipulative 'dark patterns' such as subscription traps, forced actions and misleading pricing, according to a nationwide survey by LocalCircles.
The findings come amid growing regulatory attention on mis-selling in the financial sector. Last month, Union finance minister Nirmala Sitharaman cautioned banks against aggressive cross-selling of insurance products, while the Reserve Bank of India (RBI) has proposed stricter norms mandating refunds in cases of mis-selling.
According to LocalCircles' findings, 80% of users said they faced 'subscription traps' in which platforms made it difficult to cancel policies after purchase. This marks a significant increase from 61% reported around two years ago.
The problem extends beyond cancellations. As many as 90% of respondents reported persistent 'nagging' by platforms through repeated prompts and aggressive follow-ups when seeking quotes or attempting to exit policies, up from 86% earlier.
Another major concern flagged in the survey is 'forced action': 85% of users stated that platforms demanded unnecessary personal information to provide quotes and then used the data to send unsolicited communications or promotions. This figure has risen sharply from 57% in the last 24 months.
Consumers also reported widespread pricing-related issues. Around 82% said they experienced 'bait and switch' tactics, where attractive premiums are advertised initially but actual policy costs or terms turned out to be significantly different during purchase or renewal. Additionally, 65% of respondents flagged 'drip pricing' or hidden charges that were not disclosed upfront.
The survey noted that several prominent insurance and aggregator platforms exhibit two to four such dark patterns, including interface interference and misleading design elements that nudge users into unintended decisions.
Addressing reporters after her customary post-Budget interaction with the RBI's central board, Ms Sitharaman had warned about mis-selling of insurance policies and the increasing use of dark patterns on digital platforms that nudge consumers into buying financial products they neither need nor fully understand. Dark patterns include tactics such as pre-ticked add-ons, misleading discount cards presented as insurance products, forced redirects, and confusing policy comparisons.
In recent months, the insurance regulatory and development authority of India (IRDAI)’s public commentary on mis-selling has largely focused on bancassurance — the distribution of insurance through banks. In July 2025, the regulator acknowledged concerns about banks selling insurance through their distribution networks but stopped short of imposing strict curbs. Instead, it suggested that customer misunderstanding, rather than deliberate mis-selling, may often drive disputes.
IRDAI has also taken steps to improve transparency, including extending the free-look period and introducing video-based onboarding to record customer consent.
According to IRDAI data, complaints related to mis-selling dropped from 25,482 in FY20–21 to 23,110 in FY21–22. The incidence of such complaints per 10,000 policies sold has also declined. Meanwhile, the proportion of complaints resolved in favour of policyholders increased from 24% in FY20–21 to 27% in FY21–22, reflecting stronger consumer protection mechanisms.
Despite these measures, LocalCircles says a majority of consumers continue to face challenges due to a lack of transparency and complex product structures, often resulting in financial losses or the purchase of unsuitable policies.
"So far, the government and the insurance regulator have not been able to free the sector from mis-selling of insurance policies, as 80% of users of online insurance sales and service platforms surveyed, who purchased an insurance policy, experienced a subscription trap where the platform made it difficult for them to cancel it. In fact, in the past 24 months, the percentage of users who bought an insurance policy via online platforms and had difficulty cancelling it or experienced a subscription trap dark pattern has increased from 61% to 80%. What is more, 90% of users of online insurance sales and service platforms surveyed said the platforms frequently used a nagging approach when they take an insurance quote or attempt to cancel a policy," it added.
The platform plans to share its findings with regulators, urging stronger enforcement to curb deceptive practices and ensure that insurance products are sold transparently and in line with customer needs.
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