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Curated Insight: India's new Insurance fraud framework

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TL;DR
• This resource is from the Insurance Regulatory and Development Authority of India (IRDAI).
• The IRDAI's new Insurance Fraud Monitoring Framework Guidelines.
• It asks insurers to target zero-tolerance for fraud, with risk management including a board approved policy, monitoring committee, and monitoring unit.

 

This featured resource is IRDAI's new Insurance Fraud Monitoring Framework Guidelines 2025. It establishes stricter fraud prevention requirements for India's insurance industry from April 2026.

The guidelines will be of interest to insurers operating in or considering the Indian market. They're also useful more broadly, explaining what an anti-fraud policy must contain, and calling for a dedicated fraud monitoring committee.

Here are some key takeaways from the report:

Five Fraud Categories (Insurers must address)

  • Internal Fraud: involving employees or senior management
  • Distribution Channel Fraud: involving intermediaries or distribution partners
  • Policyholder and Claims Fraud: committed by any person during purchase, servicing, or claiming of insurance policies to obtain undue coverage or payment
  • External and Cyber Fraud: perpetrated by external parties or third parties
  • Affinity or Complex Fraud: schemes involving multiple parties / collusion

Three Core Requirements (each relevant to algorithm integrity)

  • Board-Approved Anti-Fraud Policy.  For algorithm integrity, this: explains red flag indicators and fraud detection procedures, and sets expectations that algorithmic processes must adhere to.
  • Fraud Monitoring Committee (FMC). For algorithm integrity, this can provide ongoing oversight of algorithmic performance and bias. For example, the FMC will conduct annual risk assessments; these then guide algorithm development or adjustments.
  • Fraud Monitoring Unit (FMU). For algorithm integrity, this can include detailed analysis of algorithm effectiveness and false positive rates. For example, the FMU enables human oversight, regular review, and independent validation.

If done properly, these establish important safeguards addressing transparency, accountability, and fairness in algorithmic fraud detection and triage.

 

The full guidelines are available here (or search the IRDAI website).

 

Disclaimer: The information in this article does not constitute legal advice. It may not be relevant to your circumstances. It was written for specific algorithmic contexts within banks and insurance companies, may not apply to other contexts, and may not be relevant to other types of organisations.

 

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