IRDAI forms working group on AI

The Insurance Regulatory and Development Authority of India (IRDAI) has constituted a seven-member working group tasked with studying the impact of artificia...

What Happened

The Insurance Regulatory and Development Authority of India (IRDAI) has constituted a seven-member working group tasked with studying the impact of artificial intelligence (AI) on the insurance sector, including potential risks, challenges, and governance implications for insurers, policyholders, and the broader insurance ecosystem.
Deepak Gaikwad, General Manager and Chief Information Security Officer (CISO) of IRDAI, has been designated as the Member-Convener of the working group.
The group will develop frameworks for AI adoption, governance, and oversight within the insurance industry, with a specific focus on safeguarding policyholder interests and data protection.
The move follows an earlier IRDAI directive (May 2026) requiring all regulated insurers to submit an action taken report on AI cyber readiness, citing the growing threat of AI-powered cyberattacks that are more sophisticated and harder to detect than conventional threats.
IRDAI's InsurTech Working Group had previously identified AI/ML in underwriting, telematics in motor insurance, wearables in health insurance, and AI-enabled chatbot claims handling as transformative technologies for the sector.

Static Topic Bridges

Insurance Regulatory and Development Authority of India (IRDAI)

IRDAI is the statutory body that regulates and develops the insurance industry in India. It was established on April 19, 2000, under the Insurance Regulatory and Development Authority Act, 1999, which was enacted following the recommendations of the Malhotra Committee (1994) on insurance sector reforms. IRDAI's headquarters is in Hyderabad. The Authority's mandate spans licensing of insurers and intermediaries, setting solvency norms, approving policy terms and premium rates, protecting policyholder rights, and promoting the orderly growth of the insurance market.

Established: April 19, 2000, under the IRDA Act, 1999
Parent Ministry: Ministry of Finance (Department of Financial Services)
Headquarters: Hyderabad
Composition: Chairperson + not more than 5 full-time and 4 part-time members, appointed by the Union Government
IRDAI oversees both life and non-life (general) insurance companies, reinsurers, and insurance intermediaries
The Insurance Ombudsman scheme (administered through the Council for Insurance Ombudsmen) provides an independent, cost-free grievance redressal mechanism for policyholders — decisions are binding on insurers for claims up to ₹50 lakh

Connection to this news: The AI working group is an extension of IRDAI's core mandate to ensure that technological adoption within the regulated sector does not compromise policyholder interests or systemic stability — the same rationale that underpins its oversight of underwriting standards, solvency margins, and claims processing.

Artificial Intelligence in Financial Services Regulation

AI applications in insurance span the entire value chain: algorithmic underwriting (risk pricing), automated claims adjudication, fraud detection using anomaly-detection models, customer-facing chatbots and voicebots, telematics-based motor pricing, and wearable-linked health insurance products. While these innovations can lower costs and improve accessibility, they also introduce risks such as algorithmic bias (discriminatory pricing), data privacy breaches, model opacity ("black-box" decisions), and AI-enabled cyber threats including deepfake fraud and automated phishing.

AI-powered cyberattacks are more complex and harder to detect than rule-based attacks — IRDAI cited this as a specific concern in its May 2026 circular
Algorithmic bias in AI underwriting models can violate principles of fair access to insurance, particularly for marginalised segments
The regulatory challenge is balancing innovation (which can lower premiums and expand coverage) with consumer protection and systemic risk management
Global regulators — including EIOPA (EU), FCA (UK), and NAIC (US) — are developing AI governance frameworks for insurance; IRDAI's working group is India's parallel initiative

Connection to this news: The working group will assess how AI-specific risks unique to the Indian insurance context — including data protection under the Digital Personal Data Protection Act, 2023, and the low financial literacy of many policyholders — should shape India's regulatory response.

Data Protection and Policyholder Privacy

The Digital Personal Data Protection (DPDP) Act, 2023 governs the processing of digital personal data in India. Insurance companies are significant data processors — collecting health, financial, behavioural, and location data. AI-driven insurance models that use personal data for real-time risk assessment must comply with DPDP Act provisions on consent, data minimisation, and data principal rights.

DPDP Act, 2023: enacted August 2023; creates a Data Protection Board for grievance redressal
Insurance companies fall within the definition of "Data Fiduciaries" under the Act
IRDAI's Consolidated Circular on IT and Cybersecurity (2023) already mandates board-level oversight of cyber risk; the AI directive builds on this framework
Policyholders have the right to know when AI/algorithmic tools are used in underwriting or claims decisions — a principle enshrined in fairness requirements under IRDAI regulations

Connection to this news: The IRDAI working group is expected to recommend guardrails that reconcile AI-driven efficiency gains with the DPDP Act's data protection obligations and IRDAI's own policyholder protection mandate.

Key Facts & Data

Working group size: 7 members; Member-Convener: Deepak Gaikwad (GM & CISO, IRDAI)
IRDAI established: April 19, 2000 under IRDA Act, 1999
Headquarters: Hyderabad
Insurance Ombudsman: independent redressal for claims up to ₹50 lakh
AI cyber readiness directive: insurers required to submit action taken reports by May 22, 2026
Key AI use cases in insurance: underwriting, telematics, wearables, chatbot claims handling, fraud detection
Governing law for data protection: Digital Personal Data Protection Act, 2023