The Chairman of the Insurance Regulatory and Development Authority of India (Irdai), Ajay Seth, stated that there is an urgent need to eradicate so-called 'dark patterns' in the insurance sector. This is necessary to maintain consumer trust and improve access to insurance products. Furthermore, insurers must conduct an honest self-assessment of their operations.
Requirements for Transparency and Design
Seth emphasized that the public expects complete transparency, and dark patterns should not be present in the system. Dark patterns are defined as digital mechanisms that mislead users, prompting them to share personal information or make decisions they did not initially intend to make.
Common examples of such practices include spam calls, creating obstacles to subscription cancellations, and demanding personal data before a user can review the product or prices.
Prioritizing Price Over Personal Data
As an illustration, Seth noted that users visiting insurance companies' websites are often forced to provide personal information that is unrelated to the process of purchasing insurance or checking tariffs. He pointed out that instead of allowing the user to first view the product and its cost, the website might request a name, mobile number, and consent for contact even before disclosing the price.
Monitoring and Compliance
These statements came after the regulator partnered with the Institute of Government Accountants of India at the beginning of this year to monitor dark patterns in the insurance sector over the next nine months. This step followed Irdai's directive to insurers to conduct a self-assessment of compliance with CCPA guidelines regarding dark patterns and submit the results.
However, insurers reported that no dark patterns were found during these checks.
Importance of Informed Consent
Regarding informed consent, Seth advised insurers to ensure that policyholders fully understand the terms of the contract before giving their consent. He added that seeking consent should be viewed not merely as a legal formality but as an important process of building trust.
Amit Ganorkar, CEO of Tata AIG General Insurance Company, noted that all companies are reviewing their websites, but it is too early to comment on the steps taken, as customer well-being should be the priority.
Research and Market Reaction
Earlier this month, a study conducted by LocalCircles based on consumer complaints, social media posts, and an AI-based dark pattern detection tool from the platform showed that nearly 95 percent of the top 300 publicly traded companies used at least one dark pattern.
Narendra Kumar Bhairindwal, President of the Insurance Brokers Association of India (IBAI), reported that after the issuance of the circular by Irdai, they consulted experts and sent notifications to all their members.