IRDAI Sets Up AI Governance Working Group: A Step Towards Responsible Innovation
Through an office order dated 17 June 2026, the Insurance Regulatory and Development Authority of India (IRDAI) constituted a seven-member Working Group on Artificial Intelligence (WG-AI) to study AI adoption in insurance and recommend governance, oversight and safeguard frameworks. The order starts a study-and-recommendation process; it does not itself impose a new AI rule on insurers.
This move comes at a critical time when insurers are increasingly deploying AI for everything from underwriting and policy issuance to claims processing and fraud detection — areas that directly impact policyholders' rights and interests.
For a broader view of how insurers are already using AI across underwriting and claims, see our AI underwriting and claims explainer.
Why This Matters for Policyholders
The IRDAI has explicitly stated that the initiative aims to ensure the industry harnesses AI technologies responsibly while safeguarding policyholder interests. AI introduces new dimensions of ethical, operational, and cybersecurity risks that the regulator is now proactively addressing.
For policyholders, the mandate is relevant because it expressly includes ethical, transparent and explainable AI adoption, including use cases in claims and fraud prevention. Any binding requirements would depend on the working group's recommendations and later regulatory action by IRDAI.
Composition of the Working Group
The 7-member panel brings together expertise from academia, cybersecurity, and the insurance industry:
| Role | Name | Organization |
|---|---|---|
| Chairperson | Prof. Sandeep K Shukla | Director, IIIT Hyderabad |
| Member | Nandkumar Saravade | Ex-CEO, ReBIT |
| Member | Ashutosh Bahuguna | Scientist, CERT-In |
| Member | Manoj Nayak | CISO, SBI Life Insurance |
| Member | Shivanath Somanathan | CISO, Star Health Insurance |
| Member | Steve Dsouza | CRO, ICICI Lombard |
| Member Convener | Deepak Gaikwad | GM & CISO, IRDAI |
Key Areas of Focus
The working group has been tasked with an extensive 10-point mandate, including:
1. Impact Assessment
Studying how AI affects the insurance ecosystem, including potential challenges and risks for insurers, policyholders, and intermediaries.
2. Current State Analysis
Assessing the existing level of AI adoption, maturity, and governance practices across regulated insurance entities.
3. AI Inventory Mapping
Conducting a structural assessment of AI systems currently deployed by insurers.
4. Global Best Practices
Reviewing international regulatory approaches to AI governance in insurance to benchmark India's framework.
5. Governance Framework for Claims & Fraud Prevention
Suggesting frameworks for ethical, transparent, and explainable AI adoption — specifically including claims processing and fraud prevention. This is crucial for policyholders who face claim rejections based on opaque algorithmic decisions.
6. Security Against AI-Driven Threats
Assessing frontier AI tools and suggesting security controls to mitigate risks from AI-driven automated attacks on insurance systems.
7. Sector-Wide Stress Testing
Examining the need for stress tests focused on AI-related risks to assess industry preparedness and resilience.
8. AI Audit Framework
Suggesting pre-deployment and post-deployment audit requirements for AI systems used by insurers.
9. Capacity Building
Identifying skill gaps and training needs for stakeholders across the insurance value chain.
10. Other AI-Related Matters
The terms of reference also allow the working group to examine any other AI-related matter in the insurance sector that IRDAI may prescribe.
Timeline for Recommendations
The working group is expected to submit its recommendations to the IRDAI Member (F&I) within three months from the date of constitution (by mid-September 2026).
What This Means for Your Insurance Claims
At Tatkal Claims, we view this as a positive development for policyholders. The explicit focus on transparency and explainability in AI-driven claims and fraud prevention addresses a long-standing concern: when an insurer rejects a claim based on an algorithm, policyholders deserve to know why.
Because the working group is still developing recommendations, the following are possible areas for future controls rather than requirements already imposed by IRDAI:
- Documentation and audit trails for AI-assisted claim decisions
- Human oversight for high-impact claim decisions
- Clear explanations where automated systems materially affect claim outcomes
- Security controls for policyholder data and AI-related cyber risks
Looking Ahead
As the insurance sector embraces AI, the balance between innovation and consumer protection becomes critical. IRDAI's proactive approach through this working group signals that policyholder interests will remain central to India's insurance digitization journey.
We will continue monitoring the working group's recommendations and their implications for claim processing, rejection appeals, and policyholder rights.
*Facing a claim rejection and suspect AI bias or lack of transparency? Contact our legal team for expert assistance in challenging unfair claim decisions.*
