India’s consumer dispute redressal system is coming under mounting pressure, with the insurance sector emerging as the single largest contributor to grievances, reflecting deeper structural issues in claims processing and customer servicing. Recent government consumer redressal data shows that insurance accounts for nearly a quarter of all consumer cases across forums, underscoring its growing role in shaping the country’s dispute landscape even as overall pendency continues to rise sharply. The surge in disputes comes against the backdrop of a broader strain on consumer courts, where pending cases have increased by over 20% between 2020 and 2024, crossing the 5 lakh mark. Within this expanding caseload, insurance has stood out, which is not just for the volume of complaints but also for the nature of grievances, which tend to be more complex and documentation-heavy, leading to longer resolution timelines. Data from the Insurance Regulatory and Development Authority of India and government disclosures show that policyholder complaints have been steadily rising in recent years.
Total grievances in the insurance sector touched 2.57 lakh in FY25, up from about 2.02 lakh in FY23, pointing to a consistent increase in friction between insurers and customers. A significant share of these complaints stems from claims-related issues. Nearly 69% of grievances in general and health insurance are linked to claims, including delays in settlement, partial payouts, and outright rejections. This aligns with broader trends seen in the health insurance segment, where complaints alone rose 41% year-on-year to over 1.37 lakh in FY25, largely driven by disputes over claim settlement practices.
The nature of these disputes highlights persistent gaps in policy design and servicing.
Consumers frequently report issues such as non-disclosure clauses, disagreements over "reasonable and customary" hospital charges, and delays in insurer approvals at the time of discharge. The government data suggest that a sizeable proportion of policyholders face either partial settlements or rejections, reinforcing concerns around transparency and predictability in claims handling. Mis-selling and unfair business practices are also emerging as key contributors to grievances, particularly in the life insurance segment. Complaints under this category rose over 14% in FY25, indicating that distribution practices, especially through agents and bancassurance channels, continue to be a weak link in the value chain. The rising volume of complaints is also exposing capacity constraints within the grievance redressal ecosystem. While the regulator has strengthened digital interfaces such as the Bima Bharosa portal and expanded complaint registration channels, resolution timelines remain uneven. The increasing reliance on insurance ombudsmen, particularly for health insurance disputes, further indicates that existing internal grievance mechanisms within insurers are often inadequate.
This has prompted regulatory attention towards strengthening accountability.
IRDAI has been pushing for tighter oversight on claims settlement practices, curbs on arbitrary premium hikes, and improved disclosures. It has also been encouraging the adoption of internal ombudsman frameworks within insurance companies to enable faster and more transparent dispute resolution.