Source: BS
Context:
The Insurance Regulatory & Development Authority of India (IRDAI) has directed all insurers, reinsurers, and distributing channels to establish a comprehensive fraud risk management framework. This comes in response to rising instances of insurance and cyber frauds. The guidelines are set to take effect from April 1, 2026.
Key Requirements for Insurers:
- Zero Tolerance for Fraud:
- Insurance companies must adopt a board-approved anti-fraud policy.
- Policy should include red flag indicators and procedures to prevent, detect, report, and remedy fraud.
- Fraud Monitoring Committee (FMC):
- Companies must establish an FMC responsible for operationalising the fraud risk framework.
- Fraud Monitoring Unit:
- An independent unit (separate from internal audit) must support the FMC in implementing anti-fraud measures.
- Cybersecurity Measures:
- Robust cybersecurity frameworks must be implemented to prevent new-age cyber frauds.
- Continuous monitoring and strengthening of incident databases, customer verification, and access control systems.
- Data Utilisation and Industry Collaboration:
- Insurers must use available data to prevent frauds.
- Participation in the Fraud Monitoring Technology Framework provided by the Insurance Information Bureau (IIB).
- Share details of distribution channels, hospitals, vendors, and blacklisted fraud perpetrators with IIB.
- Caution Repository:
- IIB will maintain a central caution repository to safeguard sector integrity.
- Life Insurance Council and General Insurance Council will coordinate on unique identifiers, procedures, and timelines for reporting.
- Reinsurers and Distributors:
- All reinsurers and distributing channels (except individuals) must establish fraud risk frameworks proportional to their business size and risk profile.
