Irdai proposes ban on insurance website ‘dark patterns’, seeks lower distribution costs

New Delhi: Regulator Irdai on Wednesday proposed prohibiting 'dark patterns' on insurance websites, including practices that require customers to provide personal details to access product features and pricing information.

As part of wide-ranging reforms aimed at making insurance distribution more transparent and customer-centric, Irdai has issued a consultation paper on 'Recalibrating Economics of Insurance Distribution', setting out a comprehensive framework of reforms covering insurance distribution, its structure, expenses, commissions, market conduct, transparency and leveraging digital infrastructure.

Also Read: IRDAI chairman wants affordable insurance for all


Insurance Regulatory and Development Authority of India (Irdai) proposes to replace the existing complex and fragmented architecture with three broad categories of distribution entities: Insurance Distribution Entities (IDEs), Insurance Distribution Persons (IDPs) and Market Infrastructure Institutions (MIIs).

The Expense of Management (EoM) framework is proposed to be recalibrated through lower limits with a phased glide path, the paper said.

For life insurers, the EoM limit would move to a company-level basis linked to Gross Direct Premium Income (GDPI), with the limit proposed at 15 within two years and 12.5 within five years.

For general insurers, the basis would shift from gross written premium (GWP) to domestic GDPI, with the EoM limit reducing from 30 per cent of GWP to 20 per cent of GDPI within five years, also through progressive annual reductions.

"The proposed reduction in EoM is intended to lower the overall cost of insurance, thereby expanding the risk pool available in general insurance and enhancing returns to policyholders in life savings products," said the paper. Irdai has invited comments till October 25.

The consultation paper proposes tracking dark patterns and making relevant performance information available to strengthen market discipline.

Product, pricing and quality disclosure should be made by all insurers in a standard and easy-to-understand form without seeking personal details, it said.

Also Read: IRDAI pitches public insurance registry to reshape industry

Currently, product features and pricing details can be accessed by the public only after providing personal details.

"That is one of the 'dark patterns' often seen on the websites of most insurers and distributors. That is also against the guidelines issued by the Central Consumer Protection Authority under the Consumer Protection Act, 2019," Irdai said, as it proposed to prohibit 'dark patterns' under the insurance regulations.

Dark patterns mean any practices or deceptive design patterns using user interface or user experience interactions on any platform that are designed to mislead or trick users into doing something they originally did not intend or want to do.

The commission framework is proposed to be recalibrated in parallel, the paper said.

Instead of a uniform approach, commission limits would take into account the segment, line of business, distribution channel, product complexity and the effort involved in selling and servicing the product.

"Insurers and large distribution entities would be required to disclose commission policies and structures in a simple and accessible manner, while specified commercial policies would carry commission disclosures," it said.

Irdai also also proposed stronger safeguards against mis-selling, including making suitability an enforceable obligation, documenting customer needs and suitability for specified life insurance sales, and maintaining an audit trail.

The primary aim is to foster a customer-centric, competitive, efficient and transparent distribution ecosystem, while enabling better and sustainable outcomes for policyholders, insurers and distributors, it said.

Irdai said the proposed reforms are anchored in the expectations of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, which seeks to accelerate the growth and development of the insurance sector, strengthen policyholder protection, improve ease of doing business and enhance transparency in regulation-making and regulatory oversight.