KYC For Travel Insurance: All You Need To Know

Posted on: May 26, 2023 | | Written by:

KYC For Travel Insurance: All You Need To Know

Published on May 19, 2023. EST READ TIME: 3 minutes

It is no secret that more people have taken to travelling in the last few years. If you are one of them, it is important to note that a travel insurance policy can make things much easier for you during the trip. However, there have been some recent changes, as per the IRDAI guidelines. Now you will need to complete KYC for insurance for all policies bought after the 1st of January 2023.

The recent changes by the IRDAI make KYC for insurance mandatory for all types of policies, that includes travel insurance as well. Here is everything that you need to know about the new rules.

Understanding KYC

KYC stands for know your customer or, at times, know your client. It is a mechanism that allows institutions to confirm and authenticate customers. Customers must submit all the necessary documents before they can invest in any instrument. The institution, in this case, the insurance provider, will authenticate the users before letting them proceed with the purchase.

Why did the IRDAI make KYC mandatory for travel insurance?

The IRDAI has made it mandatory for all insurance providers to complete KYC before issuing a new policy or renewing an existing one. There are a few reasons behind this move by the IRDAI. One of the major reasons behind this move is to curb fraudulent activities during insurance claims. The new rules will also make it incredibly difficult to launder money.

Since the insurance companies will have access to your information, it would make the claim settlement process faster. Insurance companies will no longer need to delay the settlement to gather details related to KYC since they already have the information.

The process will make way for a centralised repository of information, which can be accessed by other insurance providers. Insurers can check claim history to ascertain if there are any fraudulent claims. It will enable insurers to improve the risk assessment of individuals and aid in product pricing as well. The next time you opt for international travel insurance , you will need to complete the KYC process.

KYC procedures that you can follow for travel insurance

Even though the IRDAI has introduced a new process in place, it has ensured that it is not inconvenient for customers. New and existing policyholders can submit the documents required for KYC using any of the following methods to complete the process.

1. Aadhar based KYC

You can either opt for online authentication via Aadhar or offline authentication as well.

2. Video-based identification process

In this process, you can complete the authentication with a representative of the insurance company via video conferencing.

3. Digital KYC

This process allows you to complete KYC digitally according to the PML or prevention of money laundering laws.

4. KYC identifier

This process allows insurance providers to complete KYC using a KYC identifier that is provided by CKYCR.

5. Via OVD

Insurance companies can also use officially valid documents of the customer to complete the KYC process.

Documents you need for travel insurance KYC

The following is a list of documents required for KYC of travel insurance policies.

1. Proof of identity

• Passport

• Driving licence

• Aadhar card

• Voter ID

2. Proof of address

• Rental agreement

• Aadhar card

• Utility bills such as Gas or Electricity

• Passport

3. Proof of income

• A copy of your salary slip

• Income tax return

Insurance companies might ask for proof of income for policies that have larger sum insured amounts.

KYC norms for travel insurance companies

Before selling any kind of multi trip travel insurance, insurance companies must follow some of the norms. Here are some norms for individuals as well as juridical persons.

1. Individuals

• With the help of documents required for KYC, insurers must truly identify a customer.

• Insurance companies must take additional steps to identify whether a customer is new or existing.

• If a customer is unable to complete KYC authentication due to age, illness or other unavoidable reasons, insurers must request OVD of the customers.

• Insurance companies are to avoid issuing policies to fictitious people or anonymous people.

• Insurers must identify a customer with the help of address, recent photograph, and identity.

• For customers who have a different address on their Aadhar and want to use a different address, they must sign a self-declaration for the same.

2. Juridical Persons

They can either be individuals or entities who take part in legal actions. And these are the norms for them before issuing them international travel insurance.

• Insurers must make sure to identify an entity and its respectful owners.

• Insurance companies must establish the legal status of a juridical person with the help of documents such as the address of the registered office, name on legal forms, powers that make the person juridical, beneficial owners, etc.

• Insurance companies must also identify individuals who are acting on behalf of juridical persons.

• Insurance companies must take the necessary steps to identify beneficial owners. It entails the individual who is the actual owner or controls the juridical entity.

Before you set out for your next international trip, make sure that you opt for multi trip travel insurance , if you are planning to visit the place more than once during a year. Based on the country that you are planning to visit, it might be mandatory to buy travel insurance to even get your Visa. The plan will safeguard you from a myriad of travel-related issues.

Conclusion

It is now mandatory to get KYC for insurance for new as well as existing customers. With the help of the documents required for KYC, you can complete the process and enjoy the benefits of this new process in the long run.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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