6 in 10 consumers of online insurance sales/service platforms report experiencing dark patterns like Nagging, Subscription Trap and Forced Action

May 17, 2024, New Delhi: Mis selling of insurance policies, whether life, health, motor, property or any other insurance, is not an uncommon practice. The insurance agents or officials often don’t tell what all the policy doesn’t cover or the drawbacks of a particular policy vis-à-vis another or hard sell a policy in an attempt to meet their targets. While there is provision for the insured to return or cancel a policy when an insurance company misleads you and sells a product by hiding important information, it is equally true that many people trust the agent and often don’t read the full document during the consideration period when the policy can still be returned without any financial loss. As an increasing number of consumers take to the internet to buy or renew insurance policies, complaints of mis-selling or manipulative selling also called as dark patterns in the online world have risen on LocalCircles in the last 9 months. The timing of these complaints coincides with the Government via the Central Consumer Protection Authority (CCPA) notifying prohibition on 13 types of dark patterns in November 2023. These include false urgency, basket sneaking, confirm shaming, forced action, subscription trap, interface interference, bait and switch, drip pricing, disguised advertisement, nagging, trick questions, SaaS (software as a service) billing and rogue malwares. Per the CCPA notification, dark patterns amount to misleading advertisement or unfair trade practice or violation of consumer rights.

Stressing on some of the dark patterns in the insurance sector, European Insurance and Occupational Pensions Authority (eiopa) in a report, states that dark patterns in insurance are those that seek to exploit consumer biases. Some of these include social proof, forced action, false sense of urgency, hidden charges, etc. In the case of forced action dark pattern, consumers are made to believe that they cannot get a quote or make a comparison without following the directions of an online platform. This may lead consumers to disclose personal information that they wouldn’t have shared otherwise. Similarly, a false sense of urgency is created by falsely informing the consumers that a product is only available for a limited period of time. This practice leverages on the fear of missing out and discourages users from reading all the information available. Websites, including insurance websites, sometimes use pre-selected or default options which are not necessarily in the interest of consumers. False hierarchies are used to promote a certain option or, on the contrary, to hide certain options. This could include using brighter colours or a bigger font size, to guide consumers into taking certain decisions, states the eiopa’s report.

The scenarios described by eiopa are relevant in India too, going by consumer experiences when the insurance policy in their hands fails to deliver on the promise assured to them. Given the Government notification and the surge in complaints, LocalCircles has conducted a national survey to find out how widespread these mis selling or dark patterns are in the online insurance sector. The survey received over 36,000 responses from insurance consumers located in 309 districts of India. 66% respondents were men while 34% respondents were women. 49% respondents were from tier 1, 24% from tier 2 and 27% respondents were from tier 3, 4 and rural districts.

61% users of online insurance sales/ service platforms surveyed who purchased an insurance policy experienced a subscription trap where the platform made it difficult for them to cancel it

The survey first asked consumers “How often have you experienced subscription traps with online insurance sales/ service platforms where once you purchase an insurance policy they make it difficult for you to cancel it?” The query received 11,575 responses with 27% of consumers who bought a policy through an online platform stating “very frequently”; 34% stated “sometimes” and 12% stated “rarely”. Only 15% of the consumers surveyed state “never” have they faced the problem while 12% of respondents did not give a clear response. To sum up, 61% users of online insurance sales/ service platforms surveyed who purchased an insurance policy experienced a subscription trap where the platform made it difficult for them to cancel it.

86% users of online insurance sales/ service platforms surveyed said the platforms frequently used a nagging approach when they take an insurance quote or attempt to cancel a policy

The survey next asked “How often have you experienced a nagging approach with online insurance sales/ service platforms where if you seek a quote or attempt to cancel a policy, you are excessively pushed to get/ continue the policy?” The query received 13,668 responses with 49% of consumers stating that they have “very frequently” faced a nagging approach with online insurance sales/ service platforms; 37% stated this has “sometimes” happened with them while 14% stated that they have “rarely” experienced it. To sum up, 86% users of online insurance sales/ service platforms surveyed said the platforms frequently used a nagging approach when they take an insurance quote or attempt to cancel a policy.

57% of respondents said platforms frequently used a forced action by seeking unnecessary personal details to provide a quote and sending unsolicited information or misusing the personal details

Forced action is one of the most common dark patterns used by online platforms to get unnecessary personal details. The survey next asked “How often have you experienced a forced action approach with online insurance sales/ service platforms where unnecessary personal details are sought to provide you with a quote and then you are either signed up to receive unsolicited information or the personal details are misused?” The received 13,007 responses with 32% stating that they have faced a forced action approach “very frequently”; 25% indicated they have faced such a situation “sometimes” and 18% stated “rarely”. The remaining 25% of respondents stated they have “never” faced this problem. To sum up, 57% users of online insurance sales/ service platforms surveyed said platforms frequently used a forced action by seeking unnecessary personal details to provide a quote and sending unsolicited information or misusing the personal details.

In summary, the survey shows that in the insurance sector, users of online insurance sales/ service frequently face dark patterns that compromise their choice, value, coverage/benefits and data. The survey shows 61% those who purchased an insurance policy online experienced a subscription trap where the platform made it difficult for them to cancel it. In addition, 86% of respondents said the platforms frequently used a nagging approach when they take an insurance quote or attempt to cancel a policy. 57% of respondents shared that platforms frequently used a forced action by seeking unnecessary personal details to provide a quote and sending unsolicited information or misusing the personal details. In view of the fact that a large percentage of online insurance buyers face a multitude of dark patterns, it is necessary that the government via the consumer rights regulator CCPA and the insurance regulator IRDAI take further action to protect consumers.

LocalCircles will share the findings of this study with both IRDAI and CCPA for their understanding and interventions.