IRDAI Issues Fraud Monitoring Guidelines Effective from April 2026 for Insurers and Partners

The Insurance Regulatory and Development Authority of India (IRDAI) has released the ‘Insurance Fraud Monitoring Framework Guidelines, 2025’ to standardise and enforce fraud control procedures across insurers and their distribution partners. 

The framework comes into force from April 1, 2026, with all entities expected to overhaul their systems for fraud detection, reporting, and prevention.

Regulatory Emphasis on Stronger Fraud Governance

The new guidelines require all insurers to adopt a zero-tolerance approach towards fraud. Insurers must formulate a fraud risk management framework tailored to their scale and risk profile. 

This includes setting up a fraud monitoring committee (FMC) led by senior management and supported by a dedicated fraud monitoring unit (FMU). These bodies are responsible for preventive actions, case reviews, and reporting mechanisms, including submitting annual reports (FMR-1) within 30 days after the financial year ends.

Obligations for Distribution Partners

Non-individual distribution channels are required to build internal systems to detect and report fraud. Their boards and top management will be held accountable for fraud control measures. This includes staff training, due diligence in hiring, and maintaining whistle-blower protection. Any suspected fraud impacting an insurer must be immediately reported with full cooperation extended to law enforcement.

Mandatory Policies and Cybersecurity Reinforcement

Each insurer must institute a board-approved Anti-Fraud Policy detailing red-flag indicators, investigation procedures, and staff responsibilities. Enhancing cybersecurity is also vital to tackle emerging digital threats. Additionally, insurers need to monitor vendors, intermediaries, and customers for suspicious activities on a regular basis.

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Industry Collaboration and Data Sharing Mandate

Insurers are instructed to contribute actively to the Insurance Information Bureau (IIB) fraud ecosystem. Sharing data related to blacklisted vendors, intermediaries, and known fraudsters has been made compulsory to foster inter-company vigilance and collective risk management.

Training and Periodic Reviews Expected

Regular training for employees, partners, and policyholders must be conducted to enhance awareness. Insurers are also expected to maintain an updated fraud incident database and refresh red flag indicators periodically to reflect new fraud patterns.

Conclusion

The IRDAI’s new framework significantly strengthens the fraud governance mechanism in the insurance sector. With clear deadlines and responsibilities laid out for both insurers and partners, the industry is heading towards enhanced transparency, accountability, and preventive vigilance.

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