Page 58 - The Insurance Times November 2024

Circular

IRDAI Corner

Insurance Regulatory and Development Author- work Guidelines, 2024. In a landscape increasingly
ity of India (Insurance Fraud Monitoring Frame- shaped by digital transactions, these guidelines are
work) Guidelines, 2024 aimed at strengthening the insurance sector’s de-
Date: 23rd October, 2024 fenses against fraud, building resilience, and maintain-
ing public trust. This framework is not only a response
1. Vide Circular Ref. No. lRDA/SDD/MISC/CIR/009/01/2013 to the growing complexity of insurance fraud but also
dated 21st January 2013, IRDAI issued the extant In- a proactive step to empower insurers to protect poli-
surance Fraud Monitoring Framework to provide regu- cyholders and preserve financial integrity.
latory supervision and guidance on the adequacy of
measures taken by insurers to address and manage risks Understanding the Scope and Applicability
emanating from fraud. The guidelines, applicable to all insurers and their dis-
tribution channels, establish a systematic approach to
2. In view of the substantial change in the nature and in- identifying, assessing, and mitigating fraud risks within
tensity of fraud over the years since, the Framework the insurance sector. The framework applies across
has been reviewed and a comprehensive insurance various types of fraud, whether it originates internally,
fraud monitoring framework guidelines for the insur- through distribution channels, or from external parties.
ance sector is drafted.
The aim is to institute standards for fraud prevention
3. Drawing insights from practices followed by other finan- and detection, enforce strong internal controls, and
cial sector regulators and international best practices increase transparency in reporting and investigations.
in this domain, the draft provides an enhanced frame-
work that includes advanced measures for fraud detec- This initiative falls under IRDAI’s authority per Section
tion, efficient fraud handling, robust fraud prevention, 34 of the Insurance Act, 1938, along with related sec-
and other relevant aspects. tions of the Insurance Regulatory and Development
Authority Act, 1999, and is guided by the Corporate
4. The draft guidelines on the revised insurance fraud Governance Regulations for Insurers of 2024.
monitoring framework are placed for comments/sug-
gestions of the stakeholders and public. Categories of Insurance Fraud
The IRDAI guidelines identify four main categories of
5. Comments / suggestions on the proposed guidelines
may be submitted to sdd@irdai.gov.in in the given for- fraud, each requiring specific strategies for mitigation:
mat on or before 13th November, 2024. 1. Internal Fraud: This occurs within the organization,
involving staff, management, or board members.
Format for suggestions is attached herewith.
Typical examples include fund misappropriation,
unauthorized access to sensitive information, or
IRDAI Launches Insurance Fraud Monitor- collusion with external fraudulent claimants.
ing Framework Guidelines, 2024 2. Distribution Channel Fraud: This type involves dis-

The Insurance Regulatory and Development Authority tribution partners and could include misrepresen-
of India (IRDAI) has introduced a groundbreaking set tation of policies, falsification of documents, pre-
of guidelines—the Insurance Fraud Monitoring Frame- mium embezzlement, or identity theft. Address-

The Insurance Times November 2024 51