Will Irdai’s Proposed Seller Tagging Help Curb Insurance Mis-selling?

Insurance Regulatory Development Authority of India’s (Irdai) draft proposal to tag every insurance policy to the individual seller could change how mis-selling complaints are examined. The idea is to make every policy traceable to the person who sold or advised on it. For customers, this could make it easier to identify who made the sales pitch, what was explained, and whether the product matched their needs.

Why Seller Tagging Matters

Mis-selling often happens at the point of sale. A customer may be told that a policy offers guaranteed returns, easy exit, low risk, tax benefit, or investment growth, but the final document may show conditions, exclusions, or charges that were not clearly understood. In bank-led insurance sales, this can become sharper because customers often trust the relationship manager and may not distinguish between a bank product and an insurance policy.

“As a broker, we already follow this approach through Point of Sales Person (PoSP) tracking and regular audits. Extending this practice across the entire industry brings much better accountability and transparency to the sales process,” says Trupti Balasubramaniam, CEO and principal officer, Probus.

Seller tagging will not automatically prove mis-selling. It can establish who handled the transaction, but the complaint will still depend on documents, disclosures, product suitability, and what was recorded at the time of sale. Still, it can create a clearer trail when a policyholder raises a grievance.

What Changes For Banks And Intermediaries

The proposed change could push banks, agents, brokers, and intermediaries to supervise their sales teams more closely. Instead of responsibility remaining only at the institutional level, accountability may operate at two levels: the organisation and the individual seller. This could mean better training, stronger documentation, and clearer explanations of premium commitments, exclusions, charges, and exit rules.

“The rules shift accountability from institutions alone to the individual seller as well. Banks and intermediaries will need stronger oversight, training, and documentation to ensure sales are suitable and compliant,” says Shilpa Arora, co-founder and COO, Insurance Samadhan.

This is especially important in bancassurance, where insurance is often sold through bank branches. A buyer may assume the product has the same safety or liquidity as other bank products, even when it is a long-term insurance contract with surrender charges, lock-ins, or market-linked risks.

Audit Trail May Help Complaints

If a seller is tagged to the policy, insurers and intermediaries may be able to trace who advised the customer, what was recommended, and whether the sale was aligned with the buyer’s needs. This can help in grievance redressal, though the outcome will still depend on the facts of each case.

“Proposal that the sales of every policy be tagged to the specific seller is a good move that will help improve transparency and accountability in the process of insurance distribution. It will be possible to establish who exactly sought, advised, or assisted in selling the particular policy,” says Narendra Bharindwal, president, Insurance Brokers Association of India.

The rule could also encourage better branch-level oversight. Sellers may have to document the customer’s needs, the product explained, key risks, charges, exclusions, and suitability. For banks and large intermediaries, this could mean stronger internal checks before a policy is issued.

What Buyers Should Check

For policyholders, seller tagging does not remove the need for caution. The first safeguard is to understand what kind of policy is being bought. A life insurance product may be pure protection, savings-oriented, pension-based, or market-linked. A health insurance policy may carry waiting periods, exclusions, co-payments, sub-limits, room rent restrictions, and claim conditions.

“For the life insurance policies, make sure you understand if the policy is purely for protection purposes, savings-based, pension-based, or linked to markets,” says Bharindwal.

Buyers should not depend only on the sales pitch. “The simplest rule is to check any verbal pitch against the official policy brochure and the signed benefit sheet. Buyers need to look closely at premium payment timelines, lock-in terms, and early exit fees before buying. It is also smart to never hand over a blank application,” says Balasubramaniam.

Customers should also check whether the return is guaranteed or market-linked, how long premiums must be paid, what happens if they stop paying, and what charges apply on early exit. Any verbal assurance should be matched against written documents.

Use The Free-Look Period

Policyholders should keep copies of proposal forms, benefit illustrations, payment receipts, and communication with the seller. If the policy issued differs from what was promised, the free-look period should be used to review the policy and raise concerns quickly.

Customers should verify the basics before committing. “Customers should verify the product type, need-based benefits, illustration of the product, exclusions, lock-in period, surrender value, and premium commitment,” says Arora.

Seller tagging can improve traceability and make it harder for accountability to disappear inside an institution. But it will work best when paired with stronger supervision by insurers and intermediaries, clearer documentation, and more alert customers.

FAQs

1. How will seller tagging help insurance buyers?

It can create a clear record of the individual who sold or advised on a policy, making it easier to investigate complaints of mis-selling. However, customers will still need documents and evidence to support a grievance.

2. Does seller tagging mean a mis-selling claim will automatically be accepted?

No. The tag may help identify the person involved in the sale, but the outcome will depend on the policy wording, proposal form, disclosures, benefit illustration, and records of what was promised.

3. What should customers check before buying an insurance policy?

Buyers should verify the product type, premium-payment term, exclusions, lock-in period, surrender value, early-exit charges and whether returns are guaranteed or market-linked. They should also use the free-look period to review the issued policy.