Winning Bizness Desk
Mumbai.Digital insurance buying is becoming easier, but hidden manipulative practices are rising sharply. A recent LocalCircles survey shows that nearly 8 out of 10 users are facing issues such as subscription traps, where buying a policy is simple but cancelling it becomes difficult. Over the last 24 months, such cases have surged from 61% to 80%, highlighting growing concerns over user exploitation in the digital insurance ecosystem.
Misuse of personal data and rising spam complaints
The survey reveals widespread misuse of personal information collected during insurance quotations. Around 85% of users said they were asked for unnecessary details, which were later used for unsolicited marketing calls and messages. This figure has increased from 57% to 85% in two years. Additionally, nearly 90% of respondents reported repeated calls and messages when they only sought a quote or tried cancelling a policy, a practice known as nagging, which has risen from 86% to 90%.
Hidden charges and misleading pricing tactics exposed
A significant 82% of users experienced what is known as bait and switch. This means the premium shown in advertisements was lower, but the final payment amount increased. Around 65% also flagged drip pricing, where hidden charges appear during renewal or claim stages. These practices are part of so-called dark patterns, designed to push users into decisions they might otherwise avoid.
- 82% users faced bait and switch tactics
- 65% reported hidden charges at later stages
- 90% experienced persistent calls and messages
- 85% flagged misuse of personal data
Major platforms under scrutiny for dark patterns
The survey names several large insurance platforms where multiple dark patterns were observed, including Policybazaar, Acko, ICICI Lombard, Tata AIG, Bajaj Allianz and HDFC Ergo. These platforms reportedly used two to four types of such manipulative techniques. Experts describe dark patterns as digital tricks that nudge users into unintended financial decisions.
Consumers advised caution while buying policies online
Experts recommend that customers use the free-look period of 30 days, which allows cancellation without major losses if terms are unsuitable. They also advise carefully reading policy documents before making payments and raising complaints if insurance is forcibly bundled with bank loans.
- Always review policy terms in detail
- Avoid sharing unnecessary personal information
- Report forced insurance selling with loans
- Use free-look period to cancel unsuitable policies
Regulatory action tightens as mis-selling becomes offence
Regulators have started taking action against such practices. Last year, IRDAI fined Flipkart Internet Rs 1.06 crore for selling insurance through inadequately trained staff and redirecting customers to intermediaries instead of insurers. The Reserve Bank of India has also issued draft guidelines under responsible business conduct, mandating that banking apps must be free of dark patterns from July 1, 2026. In cases of mis-selling, customers will be entitled to full refunds. Finance Minister Nirmala Sitharaman has stated that mis-selling of financial products is now a punishable offence under the Bharatiya Nyaya Sanhita, urging banks to focus on core operations rather than aggressive insurance selling.
