The Insurance Regulatory and Development Authority of India (IRDAI) has commissioned the Institute of Public Auditors of India to define and track insurers’ use of dark patterns over the next nine months, escalating from the compliance directive it issued in April. IRDAI Chairman Ajay Seth flagged insurers that force customers to hand over personal information before showing a quote as a dark pattern in its own right, as reported by ET BFSI.
The study follows a directive IRDAI issued in April, which instructed insurers to comply with the Central Consumer Protection Authority (CCPA) dark patterns guidelines, conduct self-assessments within 15 days, and submit action plans wherever they identified compliance gaps.
What consumers reported? IRDAI’s April directive followed a LocalCircles survey of over 87,000 insurance customers across 341 districts, which recorded widespread use of dark patterns:
- 85% said insurers forced them to share excessive personal data, up from 57% over the past 24 months.
- 80% reported difficulty cancelling policies, up from 61%.
- 90% faced persistent calls, SMS, or emails, including after they tried to cancel.
- 82% found discrepancies between advertised and actual pricing or terms.
What Seth flagged? Speaking at a Life Insurance Council event, Seth described product discovery hidden behind a wall of personal information. “If I need a quote on a term plan, I have to necessarily agree to be educated about products of large insurers,” he said. “If people do not have a choice to know the product, price, and performance freely, how will they take a decision?”
On the study, he said: “Almost all have said they don’t have dark patterns. With that kind of a response, we have reached out to the Institute of Public Auditors of India to take up the study.”
Where this fits? IRDAI is applying a framework developed by the consumer protection regulator to a sector it directly regulates. The CCPA’s 2023 guidelines list 13 dark patterns, three of which are particularly relevant to insurance sales:
- Forced action: Compelling users to share personal data to access a product, which covers the “wall of personal information” Seth described.
- Basket sneaking: adding charges or products at checkout without consent.
- False urgency: Creating a false sense of scarcity or time pressure to push consumers into making quick purchases.
The data-collection question: The practice Seth highlighted sits at the intersection of two laws. The CCPA guidelines treat coerced data-sharing as a dark pattern, while the Digital Personal Data Protection (DPDP) Act, 2023, requires consent to be free, informed, and specific. A quote flow that demands personal data before revealing a price tests both frameworks simultaneously. It manipulates consumer choice under one framework while straining the principle of purpose limitation under the other.
The enforcement gap: CCPA-led enforcement against dark…
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