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The Insurance Regulatory and Development Authority of India (IRDAI) has mandated the requirement of KYC documents to buy and renew all types of insurance policies. The new rulings have come into effect from 01st January 2023 to ensure that health and travel insurance companies in India remain protected from fraudulent activities— such as money laundering and fraudulent customers.
In the below piece, we have collated everything you need to know about the new KYC ruling and its importance while buying or renewing travel insurance in India.
What is KYC?
KYC, or Know Your Customer is an identity verification process conducted by businesses to verify the identity of their customers. The procedure is performed to assess any risk a customer poses in the way of fraudulent activities such as money laundering, identity theft, mortgage fraud, etc.
The Know Your Customer procedure usually requires financial institutions such as banks to collect and verify the correct personal details of their customers. These details include information such as name, address, and identification numbers issued by the government, such as an Aadhaar or PAN number.
What are the IRDAI-approved Procedures for attaining KYC Details?
The IRDAI has released several guidelines on Anti-Money Laundering that travel insurance companies can use to assess the KYC of customers buying a travel insurance plan. Here are a few important touchpoints::
KYC Identifiers: Through KYC identifiers, travel insurance companies can verify the customer's details through the unique pin generated in Central KYC Registry.
OVDs: The insurer can ask the customer for officially valid documents to verify the KYC details.
Aadhaar Card-based KYC: The insurance company can verify information using an authentication procedure online or offline.
Digital KYC: The insurance company can follow the Prevention of Money Laundering Rules to verify the personal details of the insured or to-be-insured customer.
PAN Card or Form 60 KYC: The insurance company can use either PAN Card or Form 60 to verify details per the application requirement.
Video-Based Identification: The insurance company can verify the given information of the insured through video calls after taking the customer's consent.
What are the KYC Documents Required to Buy Travel Insurance Plan?
To renew or buy a travel insurance plan from 01st January 2023, the customers will have to provide the following KYC documents to their insurer:
- Aadhar Card
- Voter ID Card
- Passport
- Driving License
- Ration Card with complete details such as name, address and photo
- NREGA Job Card attested by the state government personnel
Please note that the requirements of KYC documents may change/update from time to time. Thus, you are advised to verify the KYC requirements on the insurer’s official website.
What KYC Norms Should a Travel Insurance Company Follow?
The Insurance Regulatory and Development Authority of India has implemented a mandate for KYC form submission to protect insurance companies from false claims. The authoritative body has released a few norms for travel insurance companies to follow. Here are a few:
- Insurers should ensure that no policy is bought or sold under false or vague identification.
- The company should use all fair means to attain all the original data of the customer before selling the insurance policy.
- Organisations buying travel insurance for a group of people must provide accurate details of the employees along with a most recent photograph.
- At the time of claim settlement, insurers are advised to file a Suspicious Transaction Report or STR if they find a loophole in the claim settlement.
Summing It Up
A KYC check has been mandated for buying all types of insurance, whether life, term, auto or travel insurance. Whether you buy a new plan or opt for a policy renewal, a KYC check in your plan will ensure that neither the insurer nor the insured face the side effects of fraudulent activities. Although the KYC ruling is up and running, certain modifications to the scheme can happen at any time. Thus, customers should verify all the KYC regulations and policy terms before submitting confidential and personal information to an insurance company.
Disclaimer: Plan features, benefits, coverage, and claims underwriting are subject to policy terms and conditions. Kindly refer to the brochure, sales prospectus, and policy documents carefully.
