How insurance regulator aims to curb tricky dark patterns, Pg16

Key Highlights:

• The Insurance Regulatory and Development Authority of India (IRDAI) is taking steps to curb "dark patterns" and mis-selling in the insurance industry.
• IRDAI Chairman Ajay Seth has commissioned the Institute of Public Auditors of India to conduct a nine-month study on these practices.
• A survey by Local Circles revealed that approximately 80% of respondents encountered issues like hidden charges and difficult policy cancellations due to dark patterns.
• IRDAI plans to release a consultation paper in July to propose reforms in insurance distribution.

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Detailed Insights:

• "Dark patterns" are manipulative design elements on digital platforms that pressure users into making choices they might not otherwise intend.
• Common examples include forcing personal data sharing to view products, making subscription cancellations difficult, and persistent unsolicited calls.
• The issue has become widespread with the digital expansion of the insurance sector, impacting major platforms such as Policybazaar, Acko, and Tata AIG.
• Earlier, IRDAI had requested insurers to conduct a self-assessment on dark patterns, but most reported not having them.
• The upcoming consultation paper is expected to address mis-selling, enhance transparency, and potentially revise the existing commission-based distribution model.
• This move aligns with a comprehensive framework introduced by the Reserve Bank of India (RBI) to prevent mis-selling of financial instruments by banks, effective from January 1.
• The regulator aims to foster greater trust and understanding in financial inclusion for consumers.

Key Concepts Involved:

• Dark Patterns: Deceptive user interface designs that manipulate users into making unintended decisions or sharing data.
• Mis-selling: The practice of selling financial products that are unsuitable for a customer's needs or misrepresenting their features.
• IRDAI: The statutory body in India responsible for regulating and promoting the insurance and re-insurance industries.
• Consultation Paper: A document issued by a regulatory body to solicit feedback from stakeholders on proposed policy changes or new regulations.