IRDAI Sets Up AI Governance Working Group: A Step Towards Responsible Innovation
The Insurance Regulatory and Development Authority of India (IRDAI) has taken a significant step toward regulating the use of Artificial Intelligence in the Indian insurance industry. Through an office order dated 17 June 2026, the regulator has constituted a dedicated working group to guide the sector on the **adoption, governance, and oversight of AI technologies**.
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.
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, especially those dealing with **claim rejections or disputes**, this development is particularly relevant. AI-driven decisions in claims processing have often been criticized for lacking transparency and explainability. The working group's mandate to suggest governance frameworks for **ethical, transparent, and explainable AI adoption** could bring much-needed accountability to automated claim decisions.
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.
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**.
The proposed AI Audit Framework, if implemented, could require insurers to:
- Document how AI systems make claim decisions
- Ensure human oversight in critical claim rejections
- Provide clear explanations when AI is used to deny benefits
- Protect policyholder data from AI-driven security threats
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.
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*Facing a claim rejection and suspect AI bias or lack of transparency? [Contact our legal team](https://tatkalclaims.com/contact) for expert assistance in challenging unfair claim decisions.*