IRDAI Mandates Insurers to Eliminate ‘Dark Patterns’ in Insurance Digital Platforms

In order to safeguard the customers, IRDAI orders the insurers to remove dark patterns on digital insurance platforms. The IRDAI has given 15 days to the regulated entities to update them with a self-assessment on the status of compliance and submit the report.

After a national survey conducted by LocalCircles revealed that more than 8 out of 10 consumers experienced dark patterns when purchasing insurance online, the Insurance Regulatory and Development Authority of India (IRDAI) instructed all insurers and aggregators to identify and remove these practices.

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According to the press release by IRDAI, it stated that the Insurance Regulatory and Development Authority of India (IRDAI) just emphasized the necessity for regulated organizations offering insurance products on e-platforms to abide by the Guidelines on Prevention and Regulation of Dark Patterns, which the Central Consumer Protection Authority (CCPA) published on November 30, 2023.

The action is consistent with a larger regulatory effort throughout the financial industry to combat fraudulent online conduct. The Reserve Bank of India (RBI) has also raised issues about dark patterns, which are user interface layouts that trick or deceive users into doing things they didn’t plan to do.

IRDAI called attention to the Guidelines and urged the relevant regulated businesses to conduct a self-evaluation of their compliance status and submit a report within 15 days. Within a month of discovering non-compliance, an action plan with deadlines for eliminating the dark patterns must be provided.

Many users on digital platforms face dark patterns. In response to a rising issue for policy purchasers, India’s insurance regulator has intervened to address deceptive app designs that steer users into making unintended choices.

The magnitude and seriousness of the problem are highlighted by the LocalCircles study, which received over 87,000 responses from consumers in 341 districts. 80% of users said they had trouble canceling their insurance after making the purchase. In 24 months, the incidence rose dramatically from 61% to 80%.