To prevent fraudulent activities in the insurance business, sectoral regulator Irda has asked insurers to follow stringent due diligence process for staff and agents besides identification of vulnerable areas within an organisation.
The communication, sent out to chief executives of all insurance and reinsurance companies, comes against the backdrop of concerns about financial frauds that could hurt the interests of customers as well as insurers. In its 'Insurance Fraud Monitoring Framework', Irda has asked insurers to lay down procedures for monitoring and early detection of frauds.
"Fraud in insurance reduces consumer and shareholder confidence; and can affect the reputation of individual insurers and the insurance sector as a whole. It also has the potential to impact economic stability," Irda said in a communication this week.
The insurers have to submit a compliance report with the regulator by June 30, 2013.
Sebi comes out with tough norms for advisers
Sebi has notified norms that make it mandatory for investment advisers to register with the capital market regulator and also require them to disclose all issues that could result in conflict of interests, among others.
To ensure more transparency, the new regulations require investment advisers — banks, non-banking financial companies and corporates — would have to segregate investment advisory services from other activities. Investment advisers also have to disclose the fee received for their advice on a particular financial product.