• Know Your Customer (KYC) is a procedure that assists in confirming the identity of customers. In the insurance sector, KYC is crucial as it helps in preventing fraud and guaranteeing compliance with regulations. Recently, the Insurance Regulatory and Development Authority of India (IRDAI) has established new guidelines concerning KYC in car insurance. According to the IRDAI directives, insurance companies are required to adhere to KYC processes before issuing any type of general insurance policy, including car insurance policies, to clients.

Understanding the KYC Requirements in Car Insurance

• The IRDAI has indicated that the KYC process can be executed through electronic means, like Aadhaar-based authentication, video KYC, or other electronic methods, as well as through offline methods.

The KYC standards may vary for individuals and judicial persons/entities. Let’s examine the KYC standards for both:

1. KYC Norms for Individuals

KYC standards for individuals have been established to make certain that the car insurance policy is conferred to the appropriate person and to avert fraud. Below are the KYC standards for individuals in car insurance:

Name of the individual: The individual must provide their complete name as per their identity verification document.

Address proof: The individual is required to submit valid address proof such as a utility bill, bank statement, or Aadhaar card.

Identity proof: The individual must provide valid identity verification, such as an Aadhaar card, PAN card, passport, or voter ID.

Contact details: The individual needs to provide their contact details, including phone number and email address.

Photograph: The individual is required to submit a passport-size photograph for the KYC procedure.

Other documents: The insurer may ask for additional documents such as income proof or occupation proof for KYC needs.

2. KYC Norms for Judicial Entity/Persons

The following are the KYC standards for judicial entities/persons in car insurance:

Name of the judicial entity/person: The name of the entity/person according to the documents must be provided.

Legal certificate: A legal certificate affirming the judicial status must be submitted alongside the KYC form.

Address proof: A valid address proof confirming the address of the individual/entity must be presented.

Other documents: The insurer may request additional documents such as income proof or occupation proof for KYC purposes.

Please be aware that KYC standards must be complied with for all varieties of general insurance policies. Therefore, whether you are acquiring a third-party insurance policy or a comprehensive one, KYC standards must be adhered to.

Also Read: KYC Norms for Two-Wheeler Insurance

KYC Procedures Accepted by IRDAI

• The Insurance Regulatory and Development Authority of India (IRDAI) has enforced the implementation of digital KYC procedures to guarantee ease and convenience for clients. Below are the KYC methods accepted by IRDAI in vehicle insurance:

• Aadhaar-based e-KYC: This technique involves utilizing an Aadhaar card for KYC purposes. The customer can provide their Aadhaar number and biometric authentication to finalize the KYC process.
• PAN-based KYC: This approach utilizes the customer’s Permanent Account Number (PAN) for KYC purposes. The customer must provide their PAN information along with a self-attested copy of their PAN card as proof of identity. Furthermore, they must also supply documents for address proof such as a passport, voter ID, utility bills, etc. This method is recognized by IRDAI for both online and offline policies.

• It is crucial for customers to verify with their insurer regarding the accepted KYC methods and to complete the process according to the guidelines set by IRDAI. This helps to confirm the authenticity of the third-party or comprehensive insurance policy and facilitates the smooth processing of claims.

Also Read: Understanding CKYC Insurance and Car Insurance in India

Documents Required for KYC of Individuals

What Are the Advantages of the New Regulations for Insurers and Policyholders?

The execution of new KYC (Know Your Customer) regulations in the insurance industry offers several benefits for both insurers and policyholders:

1. Quicker Claim Settlements

Due to mandatory KYC compliance when purchasing a policy, insurers no longer need to ask for KYC documents during the claim process. This streamlines and accelerates the claim settlement process, providing a smoother experience for policyholders.

2. Improved Crime Prevention

Having access to precise KYC information allows insurers to better identify individuals and fight against financial crimes such as money laundering.

3. Enhanced Risk Assessment

Exact KYC information empowers insurers to evaluate risks more proficiently. By analyzing a policyholder’s profile, insurers can estimate the probability of claims and establish premiums accordingly, ensuring fair and suitable pricing for all customers.

4. Greater Customer Satisfaction

Smooth and secure processes lead to increased customer satisfaction. Efficient claim management and personalized risk-based pricing build trust, enhancing customer relationships and retention rates. These advantages also assist insurers in attracting new customers.

Conclusion

The updated IRDAI regulations concerning KYC in car insurance are designed to enhance transparency and integrity within the insurance sector. By completing the KYC process, customers can ensure to a certain degree that their policy is genuine, and that their claims will be processed efficiently.

By meeting the KYC requirements, customers can feel assured that their car insurance policy is legitimate and can safeguard them in cases of unforeseen incidents.

FAQs

1. Will I be able to renew my car insurance without KYC?

No, according to the new IRDAI regulations, insurers will not renew your policy without verifying your KYC details.

2. What occurs if I do not complete KYC for my car insurance?

Should you fail to complete the KYC process, your car insurance policy might not be issued or renewed, which would leave your vehicle uninsured.

3. Are there any consequences for not fulfilling KYC in car insurance?

Though there are no direct repercussions, failing to complete KYC can result in policy rejection, meaning you cannot legally operate your vehicle without valid insurance.