
Mandatory KYC Documents for Health insurance
LATEST IRDAI GUIDELINE FOR KYC FOR HEALTH, MOTOR & OTHER INSURANCE POLICIES.
The Insurance Regulatory and Development Authority of India (IRDAI) mandated KYC (know your customer) to buy or renew health, Auto and other insurance policies available in India on August 2022. This new guideline has been in effect since January 1st.
Before, policyholders had the option to get their KYC completed on a voluntary basis, but now that it is required by a recent IRDAI guideline, insurers must do so before selling and renewing policies to both new and existing customers. Due to the fact that insurance companies have access to their clients’ complete information, this change will result in a process that is much quicker, safer, and more seamless.
Let’s examine the reason why IRDAI made KYC mandatory for health insurance.
The Insurance Regulatory and Development Authority of India (IRDAI) has made KYC mandatory to defend insurance companies from fraudulent practices like money laundering.
Knowing your customer (KYC) helps a business gain a clear understanding of its clients and make a more accurate assessment of whether they are real and will continue to be dependable when using its insurance services. According to the risk percentage, it aids in classifying customers. Insurance companies can make better decisions in the long run when it comes to meeting customer needs if they have access to detailed information. Additionally, it speeds up and streamlines the processes for purchasing, renewing, and resolving claims.
To better understand how KYC assists insurance companies in determining the customer’s risk percentage: let’s look at an example.
Assume a policyholder works in a chemical manufacturing plant; chemicals are toxic and highly flammable, so there is a higher risk of illness due to excessive chemical exposure than someone working in the cooperative sector. We get detailed customer information with KYC, which helps with better categorization in terms of low, medium, and high risk of getting sick.
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List of accepted KYC methods:
- Aadhar-based KYC ( Online Authentication process)
- KYC Based on Aadhar Card ( Offline Authentication Process)
- Digital KYC in line with PML rule (Prevention of Money Laundering)
- Video-based identification procedure (VBIP)
- The KYC Identifier provided by CKYCR (Central KYC Registry)
- Official valid documents (OVDs), such as a passport, a driver’s licence, evidence of ownership of an Aadhaar number, voter identification cards issued by the Election Commission of India, job cards issued by NREGA attested by state government officials, letters issued by the National Population Register containing demographic information, or any other document, are notified by the central government following review by the IRDAI.
- Form 60/Pan Cards
List of KYC documents required for health insurance customers:
- Passport
- Driving License
- Evidence of ownership of an Aadhar number
- Voter identification cards issued by the Election Commission of India
- Job cards issued by NREGA attested by state government officials
- Letters issued by the National Population Register containing demographic information.
- Or any other document, are notified by the central government following review by the IRDAI.
Insurance companies are required to follow the KYC procedure in accordance with the IRDAI’s guidelines, which are as follows:
- The insurer should make every effort to confirm the true identity of a customer.
- Implement a successful process to distinguish between new and existing clients.
- Verify that no fictitious or anonymous names have been provided by any insurance plan.
- Confirm the client’s name, address, and most recent photo.
- If the address is different from the one listed on the Aadhar card, “Self declaration” is necessary. The Aadhar card will be used as evidence of identity and address.
- Ask customers for OVDs (Official Valid Documents) if aadhar authentication is not possible because of age, illness, or injury.
- Gather customer details from agents, intermediaries, and relevant sources.
- Verify that the insurance premium does not differ significantly from the customer’s income.
- The customer has the option to submit a suspicious transaction report (STR) to the Financial Intelligence Unit-India if the insurer is unsatisfied with the customer’s claimed identity or translation (FIU-IND)
- If the customer is a legal person, take the necessary steps to locate the customer and the legal owner.
- Cross-check and adequately confirm the identity and authorization of the person claiming to act on behalf of a judicial person.
- Use a variety of documents to identify and confirm the judicial person’s legal standing.
- If the customer is a politically exposed person (PEP), the insurer must consult with senior management before making such proposals.
- Insurers must carry out client due diligence in accordance with Rule 9 of the PML regulations.
- Insurers must carry out client due diligence in accordance with Rule 9 of the PML regulations.
Measures taken by insurance companies prior to conducting KYC for health insurance customers:
- Obtain PAN/Form 60 from clients.
- All necessary sources, including agents and intermediaries, should be contacted to gather detailed information about the customer.
- In accordance with Rule 9 of the PML regulations, insurers are also required to exercise client due diligence by performing KYC on both current and potential customers.
- Based on risk levels and the total amount of insurance coverage for a fiscal year, they must also continuously perform due diligence on customers.
- Do not enter into a contract with a client whose name appears on the UN Sanctions List, with Banned Parties, or with People Suspected of Having Terrorist or Terrorist Organizational Links.
- If the customer is a politically exposed person (PEP), the insurer must seek approval from senior management before making such proposals.
Conclusion:
The Insurance Regulatory and Development Authority of India (IRDAI) has mandated KYC for buying and renewing general insurance, including health insurance. The article explains how to conduct KYC for new and existing customers, as well as the safety measures that insurance companies must take before conducting KYC on health insurance customers. Go through the article to learn the list of documents needed for KYC, and keep it handy when purchasing or renewing a health insurance policy.