The New IRDAI Rules Regarding KYC in Car Insurance

Know Your Customer (KYC) is a process that helps to verify the identity of customers. In the insurance industry, KYC is important as it helps to prevent fraud and ensures compliance with regulations. Recently, the Insurance Regulatory and Development Authority of India (IRDAI) has implemented new rules regarding KYC in car insurance. As per the IRDAI guidelines, insurance companies must mandatorily follow KYC procedures before issuing any kind of general insurance policy, including car insurance policies, to customers.

Understanding the KYC Requirements in Car Insurance

The IRDAI has specified that the KYC process can be completed through electronic means, such as Aadhaar-based authentication, video KYC, or other electronic methods as well as via offline means. # The KYC norms may differ for individuals and or judicial persons/entities. Let’s look at the KYC norms for both:

1. KYC Norms for Individuals

KYC norms for individuals have been put in place to ensure that the car insurance policy is issued to the right person and to prevent fraud. Following are the KYC norms for individuals in car insurance:

• Name of the individual: The individual is required to provide their full name as per their identity proof document.
• Address proof: The individual must provide valid address proof such as a utility bill, bank statement, or Aadhaar card.
• Identity proof: The individual must provide valid identity proof such as an Aadhaar card, PAN card, passport, or voter ID.
• Contact details: The individual must provide their contact details such as phone number and email address.
• Photograph: The individual must provide a passport-size photograph for the KYC process.
• Other documents: The insurer may require other documents such as income proof or occupation proof for KYC purposes.

2. KYC Norms for Judicial Entity/Persons

Following are the KYC norms for judicial entities/persons in car insurance:

• Name of the judicial entity/person: The name of the entity/person as per the documents must be provided.
• Legal certificate: A legal certificate verifying the judicial status must be provided along with the KYC form.
• Address proof: A valid address proof verifying the address of the individual/ entity must be provided.
• Other documents: The insurer may require other documents such as income proof or occupation proof for KYC purposes.

Please note that KYC norms must be followed for all types of general insurance policies. So, whether you are purchasing a third-party insurance policy or a comprehensive one, KYC norms must be followed. Also Read: KYC Norms for Two-Wheeler Insurance

KYC Procedures Accepted by IRDAI

The Insurance Regulatory and Development Authority of India (IRDAI) has mandated the use of digital KYC processes to ensure ease and convenience for customers. Following are the KYC methods accepted by IRDAI in vehicle insurance :

• Aadhaar-based e-KYC: This method involves the use of an Aadhaar card for KYC purposes. The customer can provide their Aadhaar number and biometric authentication to complete the KYC process.

• PAN-based KYC: This method involves the use of the customer's Permanent Account Number (PAN) for KYC purposes. The customer needs to provide their PAN details along with a self-attested copy of their PAN card as identity proof. In addition, they also need to provide address proof documents such as a passport, voter ID, utility bills, etc. This method is accepted by IRDAI for both online and offline policies

• Video KYC: This method involves the customer providing their KYC details via a video call with the insurer. The customer needs to have a device with a camera and internet connection to complete the video KYC process.

• Offline KYC: This method involves the submission of physical documents for KYC purposes. The customer needs to provide copies of their identity proof and address proof along with the KYC form.

• OTP-based e-KYC: This method involves the use of a One Time Password (OTP) sent to the customer's registered mobile number for KYC purposes. The customer needs to enter the OTP in the KYC form to complete the process.

It is important for customers to check with their insurer regarding the KYC methods accepted and complete the process as per the norms specified by IRDAI. This helps to ensure the authenticity of the third party or comprehensive insurance policy and the smooth processing of claims. Also Read: Understanding CKYC Insurance & Car Insurance in India

Documents Required for KYC of Individuals

To complete the KYC process for car insurance, individuals are required to provide certain documents. These documents may include:

• Identity proof: Aadhaar card, PAN card, passport, voter ID
• Address proof: utility bills, bank statements, rental agreements
• Photograph
• Other documents as required by the insurer

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

The implementation of new KYC (Know Your Customer) regulations in the insurance sector brings multiple advantages for both insurers and policyholders:

1. Faster Claim Settlements

With mandatory KYC compliance at the time of policy purchase, insurers no longer need to request KYC documents during claim processing. This simplifies and speeds up the claim settlement process, ensuring a smoother experience for policyholders.

2. Enhanced Crime Prevention

Access to accurate KYC details helps insurers better identify individuals and combat financial crimes such as money laundering.

3. Improved Risk Assessment

Accurate KYC information enables insurers to assess risks more effectively. By evaluating a policyholder's profile, insurers can predict the likelihood of claims and set premiums accordingly, ensuring fair and appropriate pricing for all customers.

4. Enhanced Customer Satisfaction

Streamlined and secure processes contribute to higher customer satisfaction. Efficient claim handling and personalised risk-based pricing foster trust, improving customer relationships and retention rates. These benefits also help insurers attract new customers.

5. Reduced Fraud and Centralised Data Management

Centralised access to policyholder data, including details of policies, claims made, and claims settled, allows insurers to prevent fraudulent activities. This ensures that policyholders receive the coverage they are eligible for and facilitates smoother policy purchases and renewals. Also Read: IRDAI Guidelines for Car Insurance Policies

Buy Insurance for Your Car from Bajaj Allianz General Insurance Company

According to the Motor Vehicles Act, 1988, owning valid motor insurance is mandatory for all car owners to drive legally on the road. When choosing an insurance provider, consider the following:

1. A reliable insurer with a strong claim settlement ratio.
2. A hassle-free and paperless claim process.
3. Convenient online purchasing and renewal options.

Bajaj Allianz General Insurance Company offers all these features. You can buy or renew car insurance online through a simple, user-friendly process from the comfort of your home. Experience seamless service and comprehensive coverage with Bajaj Allianz General Insurance Company!

Conclusion

The new IRDAI rules regarding KYC in car insurance are aimed at improving the transparency and integrity of the insurance industry. By completing the KYC process, customers can ensure to a certain extent that their policy is genuine, and their claims will be processed smoothly. By complying with the KYC requirements, customers can have peace of mind knowing that their car insurance policy is valid and can protect them in case of any untoward incident.

FAQs

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

No, under the new IRDAI guidelines, insurers will not renew your policy unless your KYC details are verified.

2. What happens if I fail to complete KYC for my car insurance?

If you do not complete the KYC process, your car insurance policy may not be issued or renewed, leaving your vehicle uninsured.

3. Are there any penalties for not complying with KYC in car insurance?

While there are no direct penalties, failure to complete KYC can lead to policy rejection, which means you cannot legally drive your vehicle without valid insurance.

4. Does KYC apply to both third-party and comprehensive car insurance?

Yes, KYC verification is mandatory for all types of car insurance policies, including third-party, standalone own-damage, and comprehensive insurance.

5. How does e-KYC work for car insurance?

e-KYC allows policyholders to complete KYC verification digitally by linking their Aadhaar card with the insurance provider through OTP authentication. *Standard T&C apply. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.