The Insurance Regulatory and Development Authority of India (IRDAI) has proposed revising and updating its fraud-monitoring framework for insurers, along with paying special attention to cybercrime. 

In a statement, the regulator said, “In view of the substantial change in the nature and intensity of fraud over the years since, the framework has been reviewed and comprehensive insurance fraud monitoring framework guidelines for the insurance sector is drafted.”

This proposal comes days after there was a massive data breach experience by Star Health Insurance that compromised sensitive information of thousands of customers. 

Although the IRDAI communique and draft note make no direct reference to the September incident, the regulator has urged insurers to reinforce their defences against increasingly sophisticated cyber frauds. It has emphasised the need for a resilient cybersecurity framework, advising companies to implement comprehensive measures to safeguard sensitive data and ensure the integrity of their digital infrastructure.

The proposal said, “Cyber fraud can have far-reaching consequences, including identity impersonation, financial frauds, reputational damage etc. Personal information such as KYC details, financial details, and medical records are highly coveted by cybercriminals, who exploit vulnerabilities in security defences to gain unauthorised access to these sensitive data available with insurers or distribution channels.”

All insurers are required to put in a board-approved anti-fraud policy, which will have detailed procedures, processes, and safeguards to be built in by the insurer to prevent, investigate, and report fraud. 

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