MC Explained | ‘Dark patterns’ and ‘privacy zuckering’: Why they're the next big buzzwords in Insurance

An official of an insurance aggregator platform, who chose to stay anonymous, said, “We are continually refining our user experience to make buying insurance easier and more intuitive. All add-ons and optional products come with clear disclosures in line with IRDAI (Insurance Regulatory and Development Authority of India) regulations. If any customer feels misled, they reach out to our grievance redressal team, and we take every complaint seriously. We also digitally record all customer interactions, including sales calls, to ensure full transparency. Any instance of miscommunication is treated as an exception, not a reflection of our overall practices.”

Another general insurance official said, “A significant portion of our business is routed through third-party digital platforms, and we work closely with them to ensure compliance with regulatory standards. If concerns about user interface or customer experience arise, we raise them directly with the intermediary. On our own direct sales channels, we maintain strict disclosure practices and encourage policyholders to thoroughly review terms and conditions before making a decision.”

The findings of the survey, .

Here’s an explainer of what the survey—which polled over 32,000 citizens across 324 districts—found and what it means.

What are 'dark patterns', and how are they showing up in insurance?

‘Dark patterns’ refer to user interface designs that subtly manipulate consumers into taking actions they wouldn’t have consciously chosen.

Coined by British UX designer Harry Brignull, the term has been picked up and used globally for all deceptive online practices.

In India’s insurance ecosystem, LocalCircles says, they manifest in a variety of ways.

For instance, when booking a flight online, a user might find travel insurance already selected by default; they must actively deselect it to avoid being charged. In many such cases, the opt-out option is either hidden in small print or placed in a dull grey font that blends into the page, a classic case of “default bias” being used against the consumer.

Similarly, many users reported that upon purchasing health or term insurance through third-party platforms, their policies were set to auto-renew without clear communication. Others find themselves signed up for newsletters, cross-selling calls or data-sharing agreements they never explicitly agreed to, the survey said.

What is ‘privacy zuckering’ in the world of personal data?

This is a form of dark pattern named after Meta CEO Mark Zuckerberg.

This practice involves tricking users into sharing more data than they would if the terms were clearly presented. In the context of insurance, this can mean capturing medical history, family details, income brackets, or even KYC or know-you-customer information or documents under vague or bundled consent forms.

For example, when applying for a policy online, users may click 'I agree' without realising it allows the insurer or aggregator to share their data with affiliate marketers or lending partners. Some apps may not allow access to quotations or premium calculators unless users agree to broad terms of data use. These are often bundled under ‘standard privacy policies’, pages long and difficult to interpret, thus denying users informed consent.

What kind of data do insurance companies collect?

Insurance companies typically collect a wide range of personal and sensitive data to assess risk, underwrite policies and process claims.

This includes basic identification details such as full name, age, gender and contact information, along with government-issued ID numbers like PAN and Aadhaar.

They also gather detailed health records, medical reports and information on pre-existing conditions, as well as lifestyle habits such as smoking or alcohol consumption.

Financial information, including income, occupation and employment status, is also recorded, along with nominee and family member details.

Additionally, companies track claim history, previous insurance records and payment or banking information. In some cases, geolocation and device usage data may also be collected through mobile apps.

What kind of experiences are consumers reporting?

The LocalCircles survey found that 36 percent of respondents had encountered some form of dark pattern while purchasing insurance. Among the most common complaints were: Policy bundling, opaque terms disclosure, difficult cancellation, pre-ticked boxes and data misuse.

Policy bundling refers to the practice of automatically including an insurance policy, such as travel insurance, when a user purchases another product or service, like a flight or train ticket. This insurance is often pre-selected or embedded into the booking process by default. As a result, users may not realise they are purchasing additional coverage.

Opaque term disclosures refer to situations where important details such as policy exclusions or coverage limits are buried under obscure links or pop-ups.

Pre-ticked boxes for add-ons like accidental cover, critical illness riders or increased sum insured are other dark patterns seen across platforms. These options are often selected by default, requiring users to manually uncheck them, according to the survey.

Who is most vulnerable?

The survey said that while urban, tech-savvy consumers may be better equipped to spot and navigate these tactics, the vast majority of insurance buyers in Tier 2 and Tier 3 towns and rural India are at risk. Many of these users are new to digital insurance and place high trust in intermediaries or brands, the survey said.

What actions are regulators taking?

IRDAI on June 19, 2024, issued a circular asking insurers to strengthen their grievance redressal mechanisms, simplify policy documentation and improve overall disclosure practices. This followed earlier efforts to revamp its centralised grievance portal, now known as Bima Bharosa, which was relaunched on August 7, 2022, to allow multilingual complaint filing, online tracking and SMS updates for policyholders.

In parallel, the government is working toward increasing standardisation and transparency in digital insurance distribution. The proposed Bima Sugam digital marketplace was officially approved by IRDAI on March 19, 2024, and is expected to launch in mid-2025. Initially scheduled for April, the timeline was adjusted to allow integration with other regulatory reforms.

Bima Sugam will serve as a unified platform for comparing, purchasing, servicing and claiming insurance across providers, with the goal of reducing mis-selling and simplifying the consumer journey.

Separately, the Central Consumer Protection Authority (CCPA) notified the Guidelines for Prevention and Regulation of Dark Patterns on November 30, 2023.

These legally binding rules prohibit 13 manipulative digital practices, such as “subscription traps”, “forced action” and “drip pricing” across all digital platforms in India, including insurance websites and apps.

To strengthen enforcement, the CCPA issued an additional advisory on June 7, 2025, requiring e-commerce and digital platforms to conduct self-audits and file compliance declarations within three months, affirming they do not employ such patterns.