IRDAI mandates that insurance companies adopt a zero-tolerance policy to combat fraud

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

In the newly released 2025 Insurance Fraud Monitoring Framework Guidelines, the regulator has set out a series of measures aimed at eliminating fraud within the sector.

Under the guidelines, insurers must develop a board-approved policy that reflects a zero-tolerance stance toward fraud.

This policy must cover all aspects of the insurance company’s operations and activities, and must be reviewed at least once a year.

Insurers are mandated to implement red flag indicators and procedures that prevent, prevent, detect, report and address fraud across various activities.

In addition, insurers must establish a robust cybersecurity framework, monitor and enhance systems and processes to manage fraud risks.

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

In addition, a Fraud Monitoring Committee (FMC) will be established charged with operationalizing the framework and supervising activities to ensure fraud is deterred and prevented.

To support the FMC, a fraud monitoring unit will be established, independent of Internal Audit, to implement the measures proposed by the FMC.

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

Insurers are being asked to participate in the IIB’s Fraud Monitoring Technology Framework, which will facilitate the sharing of industry-wide data and threat information relating to fraudulent activity.

Brokers and insurance intermediaries are also encouraged to recognize fraud risks and establish appropriate frameworks.

According to A CNBC channel 18 Report in July 2025, a committee set up by the regulatory body He advises against mergers Between insurance companies and non-insurance entities due to potential risks to insurance policyholders.

“IRDAI Mandates Insurers to Adopt Zero Tolerance Anti-Fraud Policy” was originally created and published by International Life Insurancewhich is a trademark of GlobalData.

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