Online Insurance Nightmare
A recent survey by LocalCircles, a consumer advocacy group in India, has exposed the widespread use of deceptive practices, known as “dark patterns,” by online platforms. These tactics are designed to manipulate consumers into making unfavorable decisions.
Subscription Traps: 61% of respondents who purchased online insurance encountered difficulties when attempting to cancel their policies.
Nagging: 86% reported frequent bombardment with messages when seeking a quote or trying to cancel a policy.
Forced Action: 57% experienced platforms demanding unnecessary personal details to provide a quote and subsequently misusing or sending unsolicited information.
These manipulative practices compromise consumers’ ability to make informed choices, potentially leading them to purchase inadequate coverage or get trapped in unwanted subscriptions.
The survey garnered over 36,000 responses from insurance consumers across 309 districts in India, with 66% male and 34% female participants. The respondents were distributed as 49% from tier 1 cities, 24% from tier 2, and 27% from tier 3, 4, and rural districts.
Mis-Selling in Insurance
Mis-selling of insurance policies—whether life, health, motor, property, or others—is common. Insurance agents or officials often fail to disclose policy exclusions or drawbacks, or they aggressively sell policies to meet targets. Although there is a provision for policy cancellation if misled, many consumers trust agents and do not thoroughly read policy documents during the consideration period, when cancellation without financial loss is still possible.
Rise of Dark Patterns
As more consumers purchase or renew policies online, complaints of mis-selling or manipulative practices have surged over the past nine months, according to LocalCircles. This increase in complaints coincides with the Central Consumer Protection Authority (CCPA) prohibiting 13 types of dark patterns in November 2023. These include false urgency, basket sneaking, confirm shaming, forced action, subscription traps, interface interference, bait and switch, drip pricing, disguised advertisements, nagging, trick questions, SaaS billing, and rogue malwares. The CCPA identifies dark patterns as misleading advertisements, unfair trade practices, or consumer rights violations.
Impact on Consumers
The survey underscores significant concerns for online buyers in India. Dark patterns can lead to:
Reduced Choice:Consumers may be pressured into specific plans without fully understanding their options.
Hidden Costs: Subscription traps may result in unknowingly paying for unwanted coverage.
Data Privacy Concerns: Forced action tactics raise questions about personal information collection and usage.
Calls for Action
LocalCircles is urging government bodies like the CCPA and the Insurance Regulatory and Development Authority (IRDAI) to take action. The European Insurance and Occupational Pensions Authority (EIOPA) has also highlighted dark patterns in insurance that exploit consumer biases, including social proof, forced action, false urgency, and hidden charges. These practices can lead consumers to disclose personal information unnecessarily or make rushed decisions based on false scarcity.
The EIOPA’s report states that such manipulative scenarios are relevant in India, as consumers often find that the insurance policies they purchase fail to deliver on promised benefits.
