The Insurance Regulatory and Development Authority of India (IRDAI) is planning strict new steps to control the growing problem of fraud in the insurance sector.
The focus is simple—tighten rules at every stage, from buying a policy to settling claims.
One major change is stronger KYC checks.
These checks will now be required throughout the entire policy lifecycle, not just at the beginning.
Insurers will also need to follow anti-money laundering rules every year.
Video KYC, also known as VBIP, may soon become mandatory.
It will include geo-tagging to verify the customer’s location. In high-risk areas, insurers may stop relying on third-party KYC and instead carry out deeper checks themselves.
In fraud-prone zones, double KYC using Aadhaar authentication could also become compulsory.
Stricter Checks Before Policy Approval
IRDAI wants insurance companies to be more careful even before issuing a policy.
Sales teams may be required to prepare detailed reports, including ACR and moral hazard assessments.
These help identify risky customers early.
Another key step is a pre-issuance verification call (PIVC).
This means insurers must confirm the customer’s identity through a call before approving the policy.
These steps aim to stop fraud before it even begins.
Zero Tolerance for Fraudulent Vendors
The regulator is also taking a tough stand against fraud-linked vendors and agents.
Companies will be required to blacklist vendors or investigators found involved in fraud.
Death claims, which are often misused, will go through multiple layers of verification.
If any claim looks suspicious, it must be reported to the police before settlement.
Agents and sales channels will also face stricter monitoring, especially for policies with a sum assured above ₹2 lakh.
Stronger Coordination with Banks and Authorities
IRDAI is pushing for better coordination with banks to detect fraud faster.
Information about suspicious cases may be shared with the Reserve Bank of India (RBI) to track misuse of KYC systems.
Even government schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) could come under closer scrutiny.
Death claims may also be monitored at the head office level for better control.
Boost in Digital Surveillance and Police Involvement
To further strengthen fraud detection, IRDAI is planning better use of technology.
A new system may be developed to track mobile numbers and match them with data from the Telecom Regulatory Authority of India (TRAI).
will help identify suspicious patterns.
The plan also includes closer involvement of police and the Economic Offences Wing (EOW).
There will be training sessions for police and regular monitoring of district and state-level authorities to ensure faster action against fraud cases.
This new action plan shows that IRDAI is moving towards a stricter and more technology-driven system to protect genuine policyholders and reduce fraud.
