What IRDAI's FY25 report tells us about mis-selling, and why a second review matters
Every year the Insurance Regulatory and Development Authority of India (IRDAI) publishes an annual report that, among many other things, counts the complaints policyholders have raised. Most people never read it. The FY25 edition deserves a look, because it puts numbers on something most of us already suspect: a lot of insurance in India is bought without being understood.
The two numbers worth remembering
Per IRDAI's Annual Report for 2024-25, complaints classified as mis-selling in life insurance alone crossed 26,000 in the year. Separately, claims-related grievances across life and health insurance together crossed 1.2 lakh. These are complaints that were formally registered, which means the actual number of people who felt misled or struggled with a claim is almost certainly higher; most people don't escalate, they just stop trusting insurance.
It's important to read these numbers fairly. India has hundreds of millions of policies in force, and the overwhelming majority of them work as intended. Insurers, agents and banks distribute cover that protects families every day. The point is not that the industry is broken. The point is that when a policy goes wrong, it almost always went wrong at the moment of purchase, and nobody looked at it again until a claim.
How mis-selling actually happens
Mis-selling rarely looks like fraud. It looks like a busy afternoon. A customer needs a home loan and is told a life policy will speed things up. A parent wants a savings plan for a child and is shown a product whose returns were never clearly explained. A young professional buys health cover with a room-rent cap they didn't know existed. In each case the customer signed a proposal form, received a policy document, and filed it away.
The regulator has been closing some of these gaps. IRDAI's 2024 Master Circular on Health Insurance Products, for instance, shortened the moratorium period after which a health policy generally cannot be contested on non-disclosure grounds (barring fraud) to 60 months of continuous coverage, capped waiting periods for pre-existing diseases at 36 months, and extended the free-look period to 30 days. These are real improvements. But a rule can only help someone who knows it exists.
Why the 'after' matters as much as the 'before'
Almost all the attention in insurance is on the sale. Comparison sites, agent visits, bank counters, festival-season campaigns: all of it is aimed at the moment you buy. What's missing is the 'after', the years between purchase and claim, when your life changes and your policy doesn't.
A second review, done independently and without a sale attached, fills that gap. It asks three simple questions of the policy you already hold. What does it actually cover? Does that still match your life or your business? And is there anything in the document, an undisclosed condition, a wrong nominee, an outdated sum insured, that would cause a problem at claim time?
Most reviews end quietly. The policy is fine, perhaps with one fix. Sometimes they end with a decision to add a top-up, port a policy, or let a product lapse. Every one of those decisions belongs to the policyholder. The review's job is to make sure it's an informed one.
What you can do this week
Pull out your policy documents, all of them. Note the sum insured or sum assured, the renewal date, the nominee, and any exclusions or limits listed on the schedule. If any of it surprises you, that surprise is worth a conversation, whether with your existing advisor, your insurer's helpline, or an independent reviewer. The 26,000 complaints in IRDAI's report all began as policies somebody didn't read closely enough. Yours doesn't have to be one of them.
Sources: IRDAI Annual Report 2024-25 (grievance statistics); IRDAI Master Circular on Health Insurance Products, May 2024 (moratorium, waiting periods, free-look).