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IRDA – Data Protection For Insurance Sector

IRDA stands for Insurance Regulatory and Development Authority of India, it is the apex body overseeing the insurance business in India.

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IRDA, the Insurance Regulatory and Development Authority of India data protection for insurance sector is the apex body overseeing the insurance sector in the country. It plays a pivotal role in safeguarding policyholders’ interests and ensuring the regulated, promoted, and orderly growth of the insurance industry in India.

The insurance landscape has witnessed a significant shift towards digitization in recent years, reducing transaction costs, enhancing penetration, and improving efficiencies. However, this digital convenience raises concerns about data protection, especially in the context of IRDA’s guidelines for data protection in the insurance sector.

While the Information Technology Act, 2000, and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, provide a general framework for data protection in India, the nature of the insurance business has prompted the Insurance Regulatory and Development Authority of India (IRDAI) to prescribe an additional framework for safeguarding policyholder information and data.

IRDAI mandates insurance companies to ensure the confidentiality and protection of collected information, aligning with the specific requirements for IRDA data protection in the insurance sector. Records must be stored and maintained within India, with disclosure permitted only in specific circumstances. Recognizing the importance of data security throughout the entire data lifecycle, IRDAI has outlined a comprehensive framework, including the following obligations:

Classification of data into ‘critical’ and ‘non-critical’ categories, with established security processes for securing critical data, including maintaining an audit trail of critical data access.
Providing access to data on a ‘need to know basis’ and conducting periodic reviews of such access rights.
Obtaining confidentiality undertakings from users with access to data.
Seeking approval from information or business owners when sending sensitive data to outsourced service providers or third parties for business purposes.
Implementing controls to prevent third-party misuse of data, such as executing non-disclosure agreements and using protected emails.
Establishing effective mechanisms for data destruction.