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Why Mis-Selling Complaints Linked to Unfair Business Practices Continue to Rise in India

In the ever-evolving landscape of Indian insurance, a paradox is emerging. Despite stricter regulations and the 2024–2025 push for transparency, mis-selling complaints are not just persisting—they are rising. According to recent industry data, grievances under Unfair Business Practices (UFBP) jumped by over 14% this year, now accounting for nearly a quarter of all life insurance complaints.

Why is this happening? Let’s pull back the curtain on the "Paper–Reality Gap" and explore the systemic drivers of this trend.

1. The Paper–Reality Gap in Insurance Selling

Regulators have introduced mandatory need analysis, benefit illustrations, and recorded consent. However, on the ground, these safeguards often turn into a "tick-box" exercise.

• The OTP Trap: What was meant to be informed consent has devolved into a series of casually shared OTPs. Customers often share these codes without realizing they are "digitally signing" documents they haven't even seen.
• Optical Compliance: The paperwork looks perfect to the regulator, but the customer remains in the dark.

2. The 2024 Process Changes: Intent vs. Outcome

In 2024, IRDAI strengthened requirements for signed need analysis and explicit risk confirmation. While the intent was to empower the buyer, the outcome has been a more complex onboarding process that agents often "shortcut" to save time or hide unfavorable terms. The result is a system that is legally compliant on paper but ethically hollow in practice.

3. The Real Driver: Sales Pressure and Incentives

At the heart of mis-selling lies a lopsided incentive structure.

• Upfront Commissions: High initial commissions reward the sale, not the service.
• Target Culture: Relationship managers at banks and corporate agents face immense pressure. For many, mis-selling isn't a choice; it's a survival tactic to meet monthly quotas.

4. Low Awareness and Trust-Based Buying

India remains a "trust-based" market. Many customers, particularly senior citizens, rely on the verbal word of their bank manager.

• Assumed Safety: If a bank official says a product is "just like an FD," the customer rarely asks for the fine print.
• Complexity: Without simplified explanations, customers remain vulnerable to misleading narratives.

5. Most Common Mis-Selling Patterns Seen on Ground

• The "FD-Plus" Pitch: Selling a ULIP or traditional plan as a high-return Fixed Deposit.
• The Loan Bundle: Falsely claiming insurance is mandatory to get a loan approved.
• The "Money-Back" Myth: Assuring customers they can stop paying after 3 years without explaining heavy surrender charges.

How Bimacure.com Can Help You Fight Back

If you find yourself stuck with a policy that was sold under false pretences, you don't have to navigate the complex legal corridors alone. Bimacure.com specializes in helping policyholders resolve grievances related to mis-selling and unfair business practices.

Whether it is recovering your hard-earned money from a mis-sold plan or dealing with a rejected claim, the experts at Bimacure.com provide the technical and legal guidance needed to represent your case effectively to insurers and the Insurance Ombudsman. They bridge the gap between the victim and the resolution, ensuring that "Unfair Business Practices" don't go unchallenged.

6. What Needs to Change to Reduce Mis-Selling?

To move beyond "paper compliance," the industry needs a structural overhaul:

1. Clawback Provisions: Linking commissions to long-term policy maintenance.
2. Plain Language Fact Sheets: Replacing 50-page documents with a 1-page "Key Facts" sheet.
3. Direct Accountability: Personal penalties for agents found guilty of systemic fraud.

Frequently Asked Questions (Q&A)

Q: Why are mis-selling complaints increasing despite new regulations? A: Most regulations focus on documentation rather than incentives. As long as sales targets remain aggressive, agents find ways to bypass procedural safeguards.

Q: How does OTP-based consent contribute to mis-selling? A: It simplifies the process for the agent. Instead of explaining a 10-year lock-in, they may simply ask for an OTP to "activate the account," which the customer provides without realizing they are signing a contract.

Q: Can I get my money back if I was mis-sold a policy? A: Yes, if you can prove unfair business practices, you can approach the insurer’s grievance cell or the Ombudsman. Platforms like Bimacure.com can assist you in building a strong case for a refund.