IRDAI directs insurers to set up fraud risk management framework
What's the story
The Insurance Regulatory and Development Authority of India (IRDAI) has directed insurance companies, reinsurers, and distribution channels to create a framework for managing risks related to fraud. The new guidelines will come into effect from April 1, 2026. The IRDAI wants these companies to adopt a zero-tolerance approach toward fraud and implement an effective risk management framework.
Policy implementation
Board-approved anti-fraud policy
The IRDAI has also asked insurance companies to adopt a board-approved anti-fraud policy. This policy should include red flag indicators and adequate procedures to deter, prevent, detect, report, and remedy fraud. The move is aimed at strengthening the industry's defenses against fraudulent activities and ensuring that all stakeholders are equipped with the necessary tools to combat fraud effectively.
Committee formation
Fraud Monitoring Committee
Along with the anti-fraud policy, the IRDAI has also mandated insurance companies to set up a Fraud Monitoring Committee (FMC). The committee will be responsible for overseeing and managing fraud-related risks within the organization. This move is part of IRDAI's broader effort to ensure that all stakeholders in the insurance industry are equipped with effective tools and strategies to combat fraud effectively.