The Insurance sector regulator, Insurance Regulatory and Development Authority of India (IRDAI) recently release draft fraud monitoring guidelines for stakeholder comments. This initiative follows a series of notable fraud incidents at insurers such as Star Health Insurance Company. Under these Guidelines, insurers are obligated to implement rigorous measures such as board-endorsed anti-fraud policies aimed at ensuring zero tolerance for fraud, autonomous Fraud Monitoring Units (FMUs), bolstered cybersecurity defences, routine fraud education initiatives, outline steps for fraud detection, internal controls, and investigative processes.

The actions taken by IRDAI were in response to a security breach involving the chief information security officer of Star Health Insurance. An individual known as "xenZen" alleged that the executive had sold company data and attempted to extort more money in return for ongoing access. The hacker has now put the data up for sale at $150,000 or smaller increments of $10,000, potentially putting policyholder data at risk of widespread dissemination.

RDAI has also asked insurers to set up fraud monitoring units (FMUs) to oversee all fraud-related activities, including monitoring, investigation, and collaboration with law enforcement. The FMUs will work alongside the Fraud Monitoring Committee (FMC), which will report every quarter to the risk management committee on all fraud cases.

Comments can be submitted by 13^th November, 2024.

Click the icon to access the draft IRDAI guidelines-