KYC, or know your customer, has been around for a while. It is a process that helps institutions verify the authenticity and identity of customers. The primary aim of the process is to reduce fraudulent activities. Since the process has been successful in other fields, the IRDAI has recently decided to implement the same for car insurance policies as well.
According to the new guidelines of IRDAI, insurance companies need to follow car insurance KYC before issuing policies to new customers or even existing customers
The process can be completed using any of the methods mentioned below. Depending on your convenience and preferred mode, you can choose from the following processes. The new car insurance KYC norms vary a bit depending on whether it is for individuals or judicial persons. Here are the different norms:
The main reason for introducing the norms is to ensure that the right customer receives the policy and there are no fraudulent activities. Here are the different norms that individuals must follow for KYC in car insurance:
• Individuals must produce an official document that states their name, such as a proof of identity.
• Individuals must produce valid proof of address such as passports, utility bills, Aadhar cards, bank statements, etc.
• Individuals must produce valid proof of identities such as a PAN card, Aadhar card, passport or Voter ID.
• Individuals must provide their contact details, such as a valid phone number and an email address.
• Individuals must submit a passport-size photograph for the KYC process.
• Insurance providers might ask for additional documents, such as income proof, which you must submit for the process to be complete.
People who belong to the judicial system must adhere to the following norms:
• Name of the person or the judicial entity, along with adequate documents.
• A legal certificate that verifies the judicial status of the individual or entity must be provided with the KYC.
• Proof of address for the entity or individual must be provided.
• Insurance providers might ask for additional documents such as occupation or income proof.
The KYC for car insurance process primarily comprises three elements:
This involves verifying the identity of the customer through document, face, and address verification.
Upon completing identity verification, the insurer assesses the potential risk factors associated with the customer by cross-checking their information with reliable sources like government lists.
Insurers keep tabs on customers to examine their risk status by periodically checking for any unusual transactions, cross-border activity, and the like.
In a bid to make the new regulations a bit easier to implement, the IRDAI has outlined some ways to go about it. Here’s how to do KYC for car insurance:
For this method, the KYC of the insured is needed to complete the process. The policyholder will need to furnish their PAN details and a self-attested copy of the PAN card, which would also serve as identity proof. Also, you will need to provide proof of address, which can be your passport, utility bills, voter ID, etc. This method is available in both online and offline modes.
For this process, the insured would need to provide the Aadhar number. After providing the Aadhar number and completing the biometric authentication, the KYC process will be complete.
To complete this process, you will need to submit all the documents physically. In the offline mode, you will need to submit a proof of identity and a proof of address along with a duly filled out KYC form.
This is one of the simplest ways of completing KYC in insurance. Once you initiate the KYC process, you will receive a One-Time Password or OTP on your registered mobile number. You will need to enter this OTP in the online registration form to complete KYC.
Keeping in tune with the times, video-based KYC is one of the most modern ways of completing the KYC process. In this, you can interact directly with a representative of the insurance firm. You will need to connect with them via a device that has a camera and supports an internet connection. You can complete the KYC process over a video call.
Here are all the documents that you will need for KYC in car insurance policy:
1. Proof of identity
• Aadhar card, passport, PAN card, Voter ID
2. Proof of address
• Passport, utility bills, rental agreement, bank statement
3. Photograph of the insured
4. Any other additional documents required by your insurance provider.
KYC in car insurance has been introduced with the intention of bringing down fraudulent activities. However, there are a few other benefits as well. When you renew or buy a new comprehensive car insurance online with KYC, here are the perks:
1. Claims will be much faster since insurance providers already have access to KYC information and need not initiate the process during the claims.
2. Car insurance KYC will enable insurance providers to assess and manage risks in a much better manner. They can use the information to price the products and anticipate the possibility of a claim.
3. As insurance companies have better access to information, they can prevent money laundering cases and fraudulent claims as well.
4. KYC in insurance will make way for much better customer satisfaction and make way for new customers as well.
The next time you renew your car insurance policy, you will most likely need to complete the KYC process for it. Also, do not forget to renew the policy before its expiry. If you fail to do so, you might be required to do a self-inspection of the car. The self-inspection process, though faster than the physical inspection of the car, can delay the policy-buying process.
Whether you are buying comprehensive car insurance or third-party insurance, you will need to complete the KYC process using the above methods since it is now mandatory to do so.
The new IRDAI KYC norms came into effect on January 1, 2023.
Yes, once you complete your KYC process while buying or renewing a motor insurance policy, you don’t have to do it again unless your personal information significantly changes.
Skipping the KYC process may result in complications or delays as the insurer may not be able to issue your policy or accept your claims.
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.
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