The regulator has asked insurance companies to lay down procedures to carry out the due diligence on the personnel and submit a compliance report before June
New Delhi: the Insurance Regulatory and Development Authority (IRDA) has come out with a framework for monitoring frauds in the insurance sector and asked insurers to carry out due diligence on their staff, including agents, reports PTI.
Stating that such fraud reduces consumer and shareholder confidence and can affect the reputation of individual insurers and the insurance sector as a whole, IRDA asked insurers to lay down procedures for monitoring and early detection of frauds.
“Lay down procedures to carry out the due diligence on the personnel (management/staff)/ insurance agent/ corporate agent/ intermediary/ TPAs before appointment with them,” IRDA said in a circular to all insurance companies.
The insurers have to submit a compliance report with the regulator by 30 June 2013.
“It is required that insurers understand the nature of fraud and take steps to minimise the vulnerability of their operations to fraud,” IRDA said.
It asked insurance companies to ensure that the risk management function is organised in such a way that the insurer is able to monitor all the risk and take steps to address them.
IRDA classified frauds in the insurance sector under three heads—claim fraud or policyholder fraud, intermediary fraud and internal fraud.
It also asked the insurance companies to frame an anti-fraud policy and said that the company’s board would review the policy on an annual basis.
The insurer shall inform both potential and existing clients about its anti-fraud policies, IRDA said, adding that the insurer has to highlight the consequences of submitting a false statement for the benefit of policyholder in the insurance contract.
New Delhi: the Insurance Regulatory and Development Authority (IRDA) has come out with a framework for monitoring frauds in the insurance sector and asked insurers to carry out due diligence on their staff, including agents, reports PTI.
Stating that such fraud reduces consumer and shareholder confidence and can affect the reputation of individual insurers and the insurance sector as a whole, IRDA asked insurers to lay down procedures for monitoring and early detection of frauds.
“Lay down procedures to carry out the due diligence on the personnel (management/staff)/ insurance agent/ corporate agent/ intermediary/ TPAs before appointment with them,” IRDA said in a circular to all insurance companies.
The insurers have to submit a compliance report with the regulator by 30 June 2013.
“It is required that insurers understand the nature of fraud and take steps to minimise the vulnerability of their operations to fraud,” IRDA said.
It asked insurance companies to ensure that the risk management function is organised in such a way that the insurer is able to monitor all the risk and take steps to address them.
IRDA classified frauds in the insurance sector under three heads—claim fraud or policyholder fraud, intermediary fraud and internal fraud.
It also asked the insurance companies to frame an anti-fraud policy and said that the company’s board would review the policy on an annual basis.
The insurer shall inform both potential and existing clients about its anti-fraud policies, IRDA said, adding that the insurer has to highlight the consequences of submitting a false statement for the benefit of policyholder in the insurance contract.
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