A new pan-India survey puts hard numbers behind what IRDAI has been saying for weeks: the insurance distribution system has a trust problem, and agents are at the centre of it.
The study, titled “India’s One-Hour Insurance Problem” and conducted by Upstox in collaboration with Fingrowth Media, surveyed 450 individuals and held qualitative discussions with 300 participants across 20 cities. Agents from India’s top 10 life insurers were part of the sample. Among respondents, 93% owned endowment or ULIP products.
The one-hour problem
The headline finding: 63% of buyers received less than one hour of explanation before committing to multi-year life insurance policies. For term life insurance, the number was worse: 72% said the conversation lasted under an hour. These are products that lock in premiums for 20 to 30 years, yet the average sales interaction barely covers the basics.
Half the respondents could not distinguish between endowment and ULIP policies despite owning one. 71% could not tell a participating plan from a non-participating one. 52% confused nominal returns with inflation-adjusted returns. The knowledge gap is not surprising when agents themselves struggle: 60% of surveyed agents did not fully understand Internal Rate of Return (IRR), and only 17% consistently explained real returns to buyers.
Commissions first, customers second
63% of buyers said they believed their agent prioritised personal commissions over their needs. The agent data backs this up. 83% of agents earned over 10% commission on first-year premiums. 48% reported contest-driven incentives that steered them toward high-commission products. 39% admitted to commission pass-backs as rebates, a practice that is illegal under IRDAI regulations.
Trust scores reflected the damage. Only 14% of buyers rated their agent 5 out of 5. A full 60% gave ratings of 3 or below. Half said they would not recommend their agent to anyone.
The retention fallout
The consequences show up in lapse data. Industry retention drops from 67-70% at 13 months to 45-49% at 61 months. Nearly half of all policyholders walk away within five years. 47% of respondents in the survey said actual returns fell below expectations; 39% felt misled or under-informed at the time of purchase.
Why this matters now
This data lands at a pointed moment. Just yesterday, IRDAI Member Deepak Sood told the CII InsureInd conference that high acquisition costs and mis-selling are the two biggest barriers to expanding coverage. The week before, reports surfaced that IRDAI is studying a mutual-fund-style commission cap for insurance distribution.
Sources: Upstox/Fingrowth Media survey (“India’s One-Hour Insurance Problem”), Deccan Chronicle, CNBCTV18
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Ashok Hegde
Ashok Hegde is the Chief Executive Officer at Quantent, where he leads a team of media professionals helping clients leverage digital media for better business outcomes. With over 30 years of experience across print and digital media, he advises clients on content and media strategy — from startups to established brands. His focus is on helping organisations use online media — social, search, and mobile — to build brand awareness, drive sales, and protect reputation.
