Mis-selling, not claims, is life insurance’s biggest problem: Aviva CEO Asit Rath

Aviva Life Insurance CEO Asit Rath has sharply declared that 'mis-selling,' not claims settlement, is the gravest challenge plaguing India's life insurance sector, emphasizing a pivotal shift towards customer-centric models driven by tightening regulations. This assertion signals a significant industry pivot away from traditional, commission-fueled sales tactics, urging a fundamental re-evaluation of how insurance products are distributed and perceived across the country. The Insurance Regulatory and Development Authority of India (IRDAI) is actively pushing for this transformation, exploring 'effort-linked' and 'persistency-linked' commission models that reward long-term service quality over sheer sales volume. This move directly addresses a system where upfront, high commissions often incentivized distributors, particularly in the dominant bancassurance channel, to prioritize transactions over suitable customer advice, eroding trust and leading to high lapse rates. Insurers are now compelled to integrate data analytics and AI into underwriting and engagement strategies, striving for tailored products and continuous customer interaction beyond the initial sale. Looking ahead, the Indian insurance market is poised for a period of intensified adaptation and innovation. Industry players, including Aviva Life Insurance, are recalibrating their strategies, focusing on proprietary distribution channels, protection-oriented products, and leveraging AI for deeper customer insights to improve policy persistency. With regulatory oversight tightening and technology advancing, the imperative for genuine, long-term customer engagement and transparent selling practices will define success, aiming to boost India's low insurance penetration and foster a more trustworthy financial landscape.