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IRDAI (Insurance Fraud Monitoring Framework) Guidelines, 2025

The Insurance Regulatory and Development Authority of India (“IRDAI”) has issued the IRDAI (Insurance Fraud Monitoring Framework) Guidelines, 2025 (“Fraud Monitoring Guidelines”) dated October 09, 2025, with the purpose to address and manage risks arising out of fraud, by providing a regulatory framework for Insurers and Distribution Channels.

The key highlights of the Guidelines are mentioned hereunder:

I. Applicability and Commencement

The Fraud Monitoring Guidelines shall be applicable to all Insurers and Distribution Channels unless otherwise specified and shall come into force from April 01, 2026.

II. Objective

The Fraud Monitoring Guidelines aim to deter, prevent, detect, report and remedy fraud risks across the Insurance industry by establishing a comprehensive framework. It further ensures enhancement of the industry’s resilience against fraud, fostering a culture of integrity, protecting the interests of Policyholders, ensuring financial stability and maintaining public trust.

III. Key Definitions

  • Insurance Fraud: Guideline 3.1 of the Fraud Monitoring Guidelines defines Insurance Fraud as an act or omission intended to gain advantage through dishonest or unlawful means, for a party committing the fraud or for other related parties, including but not limited to:
    • Misappropriating funds.
    • Deliberately misrepresenting, concealing or not disclosing one or more material facts relevant to any decision / transaction, financial or otherwise.
    • Abusing responsibility, position of trust or a fiduciary relationship.
  • Cyber or New Age Fraud: Guideline 3.3 defines Cyber or New Age Fraud as any insurance fraud carried out using digital or new age technologies.

IV. Classification of Frauds

The Fraud Monitoring Guidelines classify fraud into the following categories:

  • Internal Fraud: Fraud involving internal staff, employees including senior management of the Insurer.
  • Distribution Channel Fraud: Fraud where distribution channels are involved.
  • Policyholder Fraud and/or Claims Fraud: Fraud involving any person(s) in obtaining coverage or payment during the purchase, servicing, or claim of an Insurance policy.
  • External Fraud: Fraud involving external parties, service providers or vendors.
  • Affinity Fraud or Complex Fraud: Fraud involving collusion among one or more fraud perpetrators from the above categories.

V. Fraud Risk Management Framework

The Fraud Monitoring Guidelines mandate every Insurer to target zero tolerance towards fraud by implementing an appropriate Fraud Risk Management Framework (“Framework”) specific to its business profile.

The Risk Management Committee (“RMC”) of the Insurer shall be responsible for implementing and overseeing the Framework. The Framework shall include the following:

  • Board Approved Anti-Fraud Policy: Insurers shall maintain a Board approved Anti-Fraud Policy, reviewed at least annually.
  • Fraud Monitoring Committee (“FMC”): Every Insurer shall establish an FMC headed by a Key Managerial Personnel (“KMP”) to operationalise the Framework. A Fraud Monitoring Unit shall also be established separately from internal audit to assist the FMC.
  • Functions of FMC: The FMC shall update fraud risk management measures, oversee fraud responses, collaborate with peers and conduct Annual Comprehensive Fraud Risk Assessment.
  • Reporting Requirements: The FMC shall submit quarterly reports to the RMC regarding fraud activities and their impact on the Insurer.
  • Fraud Risk Identification, Mitigation and Monitoring: Insurers shall implement measures to identify and address fraud risks and establish Red Flag Indicators (“RFIs”) for fraud detection.

VI. Cyber or New Age Fraud

Insurers shall establish robust cybersecurity frameworks, monitoring systems and fraud risk management processes to prevent cyber or new age frauds and dedicate expert teams to manage cyber fraud risks.

VII. Insurance Information Bureau (IIB)

Insurers shall participate in the Fraud Monitoring Technology Framework made available by the Insurance Information Bureau (IIB) and share details of distribution channels, hospitals, third-party vendors and blacklisted fraud perpetrators.

VIII. Framework for Reinsurance Business

The Fraud Monitoring Guidelines shall also apply to reinsurance business. Insurers undertaking reinsurance or ceding business shall reduce exposure to fraudulent claims by understanding the fraud risk management systems of their counterparts.

IX. Framework for Distribution Channels

Distribution Channels shall implement a fraud risk management framework suitable to their business size and risk profile. Intermediaries and Insurance Intermediaries shall establish robust fraud prevention, detection, reporting and remediation frameworks.

X. Training, Education and Awareness

Insurers and Distribution Channels shall conduct regular fraud awareness programs for Policyholders and the public, along with periodic training programs for employees and distribution channels.

XI. Reporting

Insurers shall file annual returns as prescribed under the Fraud Monitoring Guidelines within 30 days from the close of the financial year. Any fraud committed by Distribution Channels shall be reported to IRDAI without delay.

A copy of the Guidelines is attached herewith for your ready reference.

Source category: IRDAI

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