Parliament Question: Mis-selling practices in the insurance sector

GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES RAJYA SABHA STARRED QUESTION NO. *269 ANSWERED ON TUESDAY, 17 MARCH, 2026/26 PHALGUNA, 1947 (SAKA) MIS-SELLING PRACTICES IN THE INSURANCE SECTOR *269 # SHRI NEERAJ DANGI: Will the Minister of Finance be pleased to state: (a) the details of the data registered regarding the increasing complaints of mis-selling in the insurance sector in the past three years, State-wise; (b) the number of insurance companies/agents against whom punitive action has been taken by Government during the said period and whether the current penalty system is insufficient to protect the interests of consumers; (c) if so, other strict measures being taken to safeguard the interests of consumers; and (d) whether Government proposes to develop any concrete mechanism to fix the accountability of individual agents as well as the concerned insurance companies in the cases of mis- selling of insurance products? ANSWER THE FINANCE MINISTER (SMT. NIRMALA SITHARAMAN) (a) to (d): A Statement is laid on the Table of the House. *****STATEMENT REFERRED TO IN REPLY TO PARTS (a) to (d) OF RAJYA SABHA STARRED QUESTION NO.*269 FOR 17 MARCH, 2026 REGARDING ‘MIS- SELLING PRACTICES IN THE INSURANCE SECTOR’ TABLED BY SHRI NEERAJ DANGI, HON’BLE MEMBER OF PARLIAMENT (a) Bima Bharosa Portal maintained by the Insurance Regulatory and Development Authority of India (IRDAI) captures the data on “Unfair Business Practice” which includes “Mis-selling” and other practices where the customers are not treated fairly. The State-wise data of Unfair Business Practice is enclosed herewith as Annexure-1. The complaints on Unfair Business Practices to total complaints in last three years is as under: Year Total Complaints on % of UBP to total Percentage of complaints Unfair Business complaints total complaints Practice to total number of policies issued 2024-25 2,57,790 26,667 10.34 0.00767 2023-24 2,15,569 23,335 10.82 0.00597 2022-23 2,02,640 26,109 12.88 * * Data for 2022-23 not available with IRDAI While in absolute numbers, the complaints on Unfair Business Practices have shown an increase, the same has shown slight decrease in terms of percentage. (b) The IRDAI had imposed penalty under Section 102 of Insurance Act, 1938 on unfair business practices and other violations of the insurers and intermediaries. IRDAI has not imposed penalties on unfair business practices for FY 2022-23. The details of penalties imposed in FY 2023-24 and 2024-25 on unfair business practices are attached as Annexure-2. (c) and (d) With the notification of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 the quantum of penalty to be levied under Section 102 has been increased to Rs.10 Crore from Rs. 1 crore. Further, the IRDAI, under Section 34 of the Insurance Act, 1938 has been vested with the powers to issue directions of disgorgement. In order to curb mis-selling, the Authority has also taken the following measures: i. defined “mis-selling” under IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024. ii. specified that the Board policy of the insurer shall dwell on the measures to curb mis-selling, force-selling and mis-leading sales iii. specified the mechanism to be put in place to avoid mis-selling of insurance policies. iv. mandated suitability analysis for saving based Insurance Products and Annuity products except those sold to NPS subscriber. v. extended Free Look Period: A uniform period of 30 days is made applicable for Health and Life insurance policies. vi. mandated to capture the detail of agent / Specified Person in the proposal form as well as on policy document who has solicited the business from the customer. vii. introduced Customer Information Sheet (CIS) which provides in simple words, important information and basic features of the policy issued at one place. *****Annexure 1 referred to in part (a) of Rajya Sabha Starred Question No. *269 on “Mis- selling practices in the insurance sector” answered on 17.03.2026 S. No. States and UTs FY 22-23 FY 23-24 FY 24-25 1 Maharashtra 3,870 4,635 5,920 2 Uttar Pradesh 1,839 2,197 2,232 3 West Bengal 1,443 1,706 1,635 4 Haryana 947 1,215 1,143 5 Tamil Nadu 662 770 690 6 Karnataka 687 696 668 7 Madhya Pradesh 590 664 771 8 Gujarat 724 618 646 9 Rajasthan 559 595 740 10 Bihar 504 513 582 11 Andhra Pradesh 326 511 394 12 Jharkhand 346 420 385 13 Telangana 472 419 689 14 Punjab 489 392 459 15 Arunachal Pradesh 81 321 129 16 Kerala 337 304 226 17 Odisha 299 276 298 18 Assam 189 262 146 19 Himachal Pradesh 191 261 201 20 Chattisgarh 220 253 629 21 Uttarakhand 172 168 230 22 Others 5,666 116 1,296 23 Goa 69 39 56 24 Tripura 19 15 18 25 Meghalaya 8 14 6 26 Sikkim 8 12 6 27 Manipur 3 7 3 28 Mizoram 2 2 - 29 Nagaland 5 1 7 30 Andaman & Nicobar Islands 3,292 2,781 3,34231 Chandigarh 77 96 79 32 Delhi 1,774 2,720 2,785 33 Lakshadweep 15 6 2 34 Jammu & Kashmir 181 294 232 35 Pondicherry 14 9 11 36 Daman and Diu and Dadra and Nagar Haveli 29 27 21 Grand Total 26,109 23,335 26,677Annexure 2 referred to in part (b) of Rajya Sabha Starred Question No.*269 on “Mis-selling practices in the insurance sector” answered on 17.03.2026 PENALTIES LEVIED BY THE AUTHORITY DURING FY 2023-24 S. No. Name of the entity Amount of Date of issuance of Penalty (in Rs.) penalty order 1 Reliance General Insurance Co. Ltd. Rs.2 crore 03/01/2024 PENALTIES LEVIED BY THE AUTHORITY DURING FY 2024-25 S. No. Name of the entity Amount of Date of issuance of Penalty (in Rs.) penalty order 1 Bajaj Finance Ltd. (Corporate Agent) Rs.2 crore 15/07/2024 2 HDFC Life Insurance Co. Ltd. Rs.2 crore 01/08/2024 3 SBI Life Ins. Co. Ltd. Rs.1 crore 06/09/2024 4 Royal Sundaram General Insurance Co. Rs. 1 crore 23/01/2025 Ltd.