KYC is mandatory from 01 November for insurance policies: Live update
According to a statement made by the Insurance Regulatory and Development Authority of India (IRDAI) on October 18, 2022, KYC verification will become mandatory for health and general insurance from November 01, 2022. Currently, KYC verification is voluntary. The deadline won’t be extended further in this regard, it was further noted.
Let’s quickly study the terms, KYC, insurance policy, and IRDAI before moving on.
The term “KYC” refers to the method used by banks, insurance companies, and other institutions to verify the identity and addresses of all of their customers and clients before or during the course of a transaction.
Through pertinent supporting papers, such as photo IDs (such as a PAN card or an Aadhar card), in-person verification (IPV), and proof of address, KYC is used to confirm a person’s identity and place of residence.
The insurance policy, which establishes the claims that the insurer is legally obligated to pay, is a contract (often in standard form) between the insurer and the policyholder. The insurer guarantees to reimburse losses brought on by risks covered by the policy language in return for an upfront payment known as the premium.
The IRDAI is a legislative and regulatory agency overseen by the Ministry of Finance, Government of India. It is responsible for the entire regulation and growth of the insurance industry in India.
Regarding its statement on October 18, KYC is required for insurance coverage. The new regulations will take effect on November 01. Four companies, namely CDSL, NDSL, KARVY, CAMS, have been given permission by the IRDAI to do KYC verification. However costs associated with KYC verification will fall on insurance companies. It is abundantly evident that requiring KYC benefit an extensive database and prevent fraud.