The Insurance Regulatory and Development Authority of India (IRDAI), the insurance regulator, recently announced that from 1 January 2023, all new health, auto, travel, and home insurance policies will require Know Your Customer (KYC) documents. The regulation applies to all types of insurance, including bike insurance, life, health, property, and casualty, regardless of premium.* #
KYC was a mandatory requirement for purchasing life insurance but not for general insurance such as medical, travel, auto, and home insurance. Until 31 December 2022, if the health insurance claim exceeds INR 100,000, the presentation of KYC documents, such as a PAN or Aadhar card, will be required during the health and new bike insurance claim.
For existing customers, regulators require insurers to collect KYC documents within a certain period. The term is two years for ‘low-risk’ policyholders and one year for other customers, including ‘high-risk’ customers.
During the first and second waves of COVID-19, some hospitals demanded deposits for COVID-19 treatment even though patients had cashless policies. The IRDAI has asked insurance companies not to collect such deposits for hospital admissions due to COVID-19. Insurers are encouraged to reduce paperwork and report data consistently to avoid discrepancies. #
Being KYC Compliant
Existing customers who need to submit KYC documents to their insurance company can contact their bike insurance company to complete the KYC. New or existing customers who fail to complete the KYC check may be unable to purchase or renew insurance policies.
KYC documents include photo identification such as a PAN card, Aadhar card, driver’s license, passport, and proof of address such as a utility bill, Aadhar card, driver’s license, passport, and voter ID.
KYC methods Accepted By IRDAI
- Aadhar-based KYC (can be done both online and offline)
- Individual submission of KYC documents
- Digital KYC
- Video-based KYC
- KYC Identifier (Central KYC Record Registry) #
What Are The Benefits Of This New Policy?
Insurance companies must ensure that policyholders are KYC compliant when purchasing policies, so they do not need to require KYC documentation when they claim claims.
- Helps expedite the claim resolution process while performing an online bike insurance check.
- Allows insurance companies to identify the individual better and curb fraudulent activities such as money laundering.
- With accurate KYC for bike insurance details, insurers can better assess risk and set an appropriate premium.
- Efficient processes help attract new customers and retain customers. Centralised data ensures policyholders receive appropriate insurance coverage.
- All insurers can look at insurance-related data such as policies, claims made, and claims settled. This reduces fraudulent claims and provides better service for policy underwriting and renewals. *
Conclusion:
This IRDAI framework aims to prevent money laundering and terrorist financing in the insurance sector. New rules apply to both. Life insurance and non-life insurance apply regardless of premium. This ensures a smooth and efficient insurance process that benefits both parties. Customers and insurers. #
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* Standard T&C Apply
# Visit the official website of IRDAI for further details.
‘Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.’
