Beyond Regulation: Assessing IRDAI’s Effectiveness in Addressing Mis-selling and Market Conduct Failures

The efficiency of the Insurance Regulatory and Development Authority of India in guaranteeing consumer safety within the Indian insurance industry is critically examined in this paper. The welfare of the consumers is nonetheless threatened by enduring problems including mis-selling and unfair claim repudiation, despite IRDAI’s establishment of a thorough regulatory framework. The paper examines IRDAI’s legislative mission, institutional mechanisms including the Insurance Ombudsman and internal grievance procedures and regulatory tools, especially the Protection of Policyholders interest Regulations, 2017 using doctrinal research methodology. This paper highlights a crucial disconnect between market results and legislative design, as demonstrated by the substantial losses suffered by consumers because of deceptive sales tactics. IRDAI’s reliance on a compliance based, disclosure oriented regulatory strategy, which presumes educated consumer decision making but falls short in addressing information asymmetry and intermediary wrongdoing, is blamed for this disparity. Enforcement effectiveness is further undermined by institutional issues such as fragmented regulatory jurisdiction which is shown by IRDAI-SEBI dispute over ULIPs and worries about the concentration of quasi-legislative, executive and adjudicatory powers. The paper concludes that improved monitoring of digital and intermediary driven risks, increased inter-regulatory coordination and a change to enforcement driven regulatory architecture which are necessary for real consumer protection. It suggests specific changes meant to overcome enforcement loopholes and raise the general effectiveness of consumer protection in India’s insurance industry.