Misselling in insurance sector a significant concern: Irdai annual report

Irdai has flagged mis-selling as a major concern in India's insurance sector, asking insurers to conduct root-cause analysis, even as penetration remained unchanged at 3.7% in FY25

The insurance regulator has flagged concerns over mis-selling in India’s insurance sector and asked insurers to address the issue by conducting a root-cause analysis to identify underlying causes. It has also advised insurers to implement measures such as assessing product suitability, introducing distribution channel-specific controls, and putting in place a structured plan to address mis-selling complaints, including periodic root-cause analyses. 

“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 Insurance Regulatory and Development Authority of India (Irdai) said in its annual report on Tuesday. 

 

Insurance penetration in India remained unchanged at 3.7 per cent in FY25. Life insurance penetration declined to 2.7 per cent from 2.8 per cent in FY24, while non-life insurance penetration remained flat at 1 per cent during the year. 

The insurance sector’s profit surged in FY25. The life insurance industry reported an 18.14 per cent year-on-year (Y-o-Y) increase in profits to ₹56,006 crore in FY25, while the non-life insurance industry recorded nearly 30 per cent Y-o-Y growth to ₹13,154 crore, according to the annual report.    

Of the 25 life insurers operating during the year, 18 reported profits. State-owned Life Insurance Corporation of India posted an 18.38 per cent rise in profit to ₹48,151 crore, while private-sector life insurers collectively recorded a 16.69 per cent increase in profit to ₹7,855 crore. In FY24, life insurers had reported a net profit of ₹47,407 crore.