In light of the ongoing COVID-19 crises - which has forced the government to implement a national wide lockdown - the Insurance Regulatory and Development Authority of India (IRDAI) has issued a notification allowing insurance companies to provide the Aadhaar-based authentication to complete KYC procedure to provide insurance services to the customers. With the new guidelines in place, buying insurance policies will become easier than ever before. As per the IRDAI guideline – in order to facilitate general public to easily fulfil ‘Know Your Customer’ (KYC) norms while availing insurance services, the regulatory body has recommended all insurance companies to avail Aadhaar Authentication Services of the Unique Identification Authority of India.
The Regulatory Guidelines
On the insurance front, the Central Government has permitted e-KYC for 20 private life insurers (almost all life insurers registered with IRDAI), and six general insurance companies. eKYC or Digital KYC is a very helpful and paperless Aadhaar-based process for fulfilling the KYC requirements while buying insurance or investing in mutual funds. It is highly expected that this move by IRDAI will go a long way in enabling the insurers to truly embrace the Digital India initiative of the government.
Buy Insurance – The Digital Way
For the welfare of the customers, digital has now even extended its spread to more difficult processes like KYC in the insurance industry. With introduction of eKYC, people can avail services like insurance and banking facilities. eKYC is a smart way for completion of KYC (know your customer) process digitally and further eliminate the need for filling up physical forms as well as submission of physical documents. The entire process of eKYC becomes all the more useful specially during times like this when the entire country is under lockdown and it is not possible for people to visit insurance office in order to buy insurance policies. However, buying a life and health insurance policy is very important during this time to stay adequately protected against Death and Disease.
Usually, the prime objective of eKYC is to register the customer with the least amount of paperwork and in the shortest possible time possible. This service has thus turned most beneficial in times like these when all the authorities are advising to suggest maximum social distancing. Most insurers and banking institutions are allowing customers to now increasingly use eKYC services in order to buy insurance, open bank accounts, transfer money and avail other beneficial services. The customers are certainly seeing it as a welcome move in the long run as the distance between the customer and servicing entity (insurers, banks etc.) would cease to be an issue and anyone can get serviced by their chosen entity while being physically present in any part of the country (or even the world).
As per the IRDAI issued guidelines, the eKYC option will allow insurers to replace a set of documents such as photograph, identity and address proof with Aadhaar of the customers. However, proof of income and medical statement (if required) will still have to be scanned and uploaded by the customer. In a similar guideline issued last year, the regulator directed the insurers to refrain from using eKYC for authentication. Moreover, in cases where Aadhaar was shared as proof of identity, insurers were strictly asked to not store the Aadhaar number in any form. However, this guideline has now been revoked by the regulator.
The author is the Head, Product and Innovations, Policybazaar