Before discussing the topic it is important to understand the definition of fraud pertaining to insurance.

In a broader term, insurance fraud is an activity or the omission, with the intention to gain advantage through a dishonest or unlawful way for a party committing the fraud or for other related parties. This may, for example, is achieved by means of misappropriating assets or deliberately misrepresenting, concealing, suppressing or not disclosing one or more material facts relevant to the financial decision, transaction or perception of the company’s status; abusing responsibility, a position of trust or a fiduciary relationship.

There are following broad categories (types) of Insurance frauds:


  1. Fraud by Policyholder and/or Claims Fraud: Fraud against the insurance company in the purchase and/or execution of an insurance product, including fraud at the time of filing a claim.
  2. Intermediary Fraud: Fraud directly by an insurance agent/Corporate Agent/intermediary/Third Party Administrators (TPAs) against the insurance company and/or policyholders.
  3. Internal Fraud: Fraud/ misappropriation against the insurance company by its Director, Manager and/or any other officer or staff member (by whatever name designated).

How to report Insurance Fraud- Everything you need to know about:


The process of reporting any fraud - the scope of this topic - that is detected or suspected is very important and we will discuss here the same for the above-mentioned categories of fraud.

If employees are involved in a fraudulent activity it should be mandatory to report any incidence of fraud or suspected fraud, immediately to the Head Fraud Control/ Vigilance Department who may register First Information Report/ police complaints against the fraudulent individual as per the companies policy.

Any individual (whether employed as full time or part time employees or on adhoc/ temporary/contract employment, trainees, apprentices, vendors'/ suppliers'/ contractors' representatives/consultants /service providers or any other agency engaged in business with the insurance company) – just as soon as he/she comes to know of any fraud or suspected fraud or if they notice any other fraudulent the activity must report such incident(s) without delay to the personnel notified as per the insurance company's internal policy.

The reporting of the fraud should normally be in writing. In case the reporter is not willing to produce any written statement of fraud but is in a position to give sequential and specific transaction of fraud/suspected fraud, then the notified personnel receiving the information should record such details in writing as narrated by the reporter and also maintain the details about the identity of the official/employee/ other person reporting such incident at the same time the person to whom the fraud or suspected fraud has been reported must maintain confidentiality with respect to the reporter. Such matter should under no circumstances be discussed with any other person who is not authorised to know about such matters. Anonymous complaints received, if not backed by any kind of relevant evidence, will not be acted upon at all. However, a record of such complaints should be maintained. Also, a record of the reasons to be made in writing (for not taking any action on such anonymous complaints) should be maintained by the notified personnel.

All reports of fraud or suspected fraud should be handled and dealt expeditiously. All fraud, suspected fraud, or other dishonesty, should be investigated and where appropriate, the concerns may be reported to the relevant regulatory authorities as per the following timelines:

  1. Internal Investigation: 45 days.
  2. Legal Notice: 30 days.
  3. Police Complaint: 45 days.

IRDA Life council has formed a core group to discuss the framework for exchange of information and the notified personnel should be a part of the core team.

Every employee (full time, part time, temporary, contractual), a representative of vendors, consultants, service providers or any other agency(ies) doing any type of business with the the insurance company is expected and should be responsible to ensure that there is no fraudulent act committed in their areas of responsibility/control. As soon as it is learnt that fraud or suspicion of fraud has taken or is likely to take place they should immediately apprise the same to the concerned official as per the procedure.

All officers shall share the responsibility to Create a culture whereby employees are encouraged to report any fraud or suspected fraud which comes to their knowledge, without any fear of victimization.

Complaints anonymously received, if not supported by the relevant evidence or not easily verifiable by the Company, may not be acted upon. All reports of fraud or suspected fraud shall be handled and be coordinated by the notified personnel.

It is important to ensure that the designated team should be informed of suspected fraud or other financial crime immediately and that no action should be taken until directed by the Fraud control team. The Whistle-blower policy should be in place and should have been approved in the Board Meeting.

Fraud Monitoring Function (FMF) should be responsible for the Internal reporting from/and to Management and Board, Furnishing various reports on frauds to the IRDA as stipulated in the guidelines; and Furnish periodic reports to their respective Board for its review.

All employees/advisors must report any incidence of fraud or suspected fraud, immediately to the Compliance Officer. This can be done in person or by telephone or through email or in writing to the notified personnel.

Employees/Advisors must not investigate suspected fraud themselves or communicate their suspicions to other employees/advisors without the approval or direction of the Compliance Team.

The statistics on various fraudulent cases investigated/highlighted and action taken thereon should be filed with IRDA in forms FMR 1 and FMR 2 providing details of:

  1. outstanding fraud cases; and
  2. closed cases of fraud every year within 30 days of the close of the financial year.