IRDAI mandates insurers to adopt zero-tolerance anti-fraud policy

The Insurance Regulatory and Development Authority of India (IRDAI) has issued directives to insurance companies, emphasising the need for a stringent zero-tolerance, anti-fraud policy.

In the newly released Insurance Fraud Monitoring Framework Guidelines 2025, the regulator has laid down a series of measures aimed at eradicating fraud within the sector.

Under the guidelines, insurers are required to establish a board-approved policy that reflects a zero-tolerance stance towards fraud.

This policy should encompass all aspects of the insurer’s operations and activities, and must be reviewed at least once a year.

Insurers are tasked with implementing red flag indicators and procedures that deter, prevent, detect, report and remedy fraud across various activities.

Additionally, insurance companies must set up a robust cybersecurity framework, monitoring and strengthening systems and processes for fraud risk management.

The IRDAI has mandated the formation of a risk management committee within each insurer, which will be responsible for the effective implementation and oversight of the fraud risk management framework.

Additionally, a fraud monitoring committee (FMC) is to be established, tasked with operationalising the framework and overseeing activities to ensure fraud deterrence and prevention.

Supporting the FMC, a fraud monitoring unit will be set up, independent of internal audit, to implement measures suggested by the FMC.

The guidelines also highlight the role of the Insurance Information Bureau (IIB) in utilising data to prevent fraud within the insurance sector.

Insurers are required to participate in the Fraud Monitoring Technology Framework provided by the IIB, which will facilitate industry-wide data sharing and threat intelligence on fraudulent activities.

Intermediaries and insurance intermediaries are also called upon to recognise fraud risks and establish adequate frameworks.

According to a CNBC TV18 report in July 2025, a panel set up by the regulator advised against mergers between insurance companies and non-insurance entities due to potential risks to policyholders.

“IRDAI mandates insurers to adopt zero-tolerance anti-fraud policy ” was originally created and published by Life Insurance International, a GlobalData owned brand.

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