Taking into account restriction on physical movement of people due to coronavirus pandemic, insurance regulator IRDA has allowed use of eKYC for select insurance companies in their operations. The move will make it possible for insurance companies to service most of customers' requests without any physical contact. "The eKYC is an initiative to make the process of buying the policy quicker and easier by completing the KYC process online without any need for physically meeting the customer," says Rakesh Goyal, Director, Probus Insurance, Insurtech Broking Company.
Enabled by this facility, soon insurance companies will be able to offer new polices to customers and process most of service requests online. "The latest announcement by IRDAI on allowing insurers to offer eKYC will help smoothen the customer journey. It is currently applicable for policy level transactions such as change of address and surrender of policy etc, and is in the process of being implemented for policy purchasing," says Manu Lavanya, Director & Chief Operations Officer, Max Life Insurance.
With the advent of Aadhaar-based OTP confirmation, IRDA has allowed eKYC process for insurance customers. It made the enrolment of new customers and servicing existing customers easy. However, due to privacy-related issues, the Supreme Court order halted the process in 2018. Following this, the union government passed a bill in 2019 giving permission to voluntary use of the Aadhaar for KYC. However, it was yet to be implemented in insurance industry. Given the current lockdown situation in many places and people preferring social distancing, the move by the IRDA to allow eKYC will provide much-needed convenience to both customers and insurers.
Only select insurers allowed to do eKYC
Not all insurance companies have been allowed to do the eKYC process. IRDA has given permission to 20 life insurance companies out of total 24 life insurance players. In general insurance category, out of total 34 players, only nine have been allowed to do the eKYC. Within general insurance category, out of seven standalone health insurance companies, it has allowed only three players to do the eKYC.
How does the eKYC work?
Due to the tedious process involving personal visit to nearest branch to long processing period, many customers often avoided taking forward their requests. However, with eKYC, not only can they save time but also put their requests from home. "The process has replaced a bunch of documents such as address proof, photograph and identity proof with just Aadhar. In a situation like today when a customer cannot step out of the house and people are adapting online services owing to lockdown, this will indeed save them time from uploading required documents," says Rakesh Goyal, Director, Probus Insurance, Insurtech Broking Company.
Aided by advanced technology, the authentication process seamlessly connects many stakeholders on real-time basis. "Once a customer initiates a request, a secure link is sent to them in which they enter their Aadhar number. Through this, an OTP is generated and sent to the customer. As soon as the customer enters it onto the system, an intermediary (such as NSDL) prompts the UIDAI server to authenticate the identity of the customer, while simultaneously populating customer details into our database," says Lavanya of Max Life Insurance.
Earlier, if you had to avail any services you were needed to give paper-based evidence of residence proof along with photo identity proof. The process was tedious not only for customers but also for insurance companies as they had to physically verify, authenticate, scan and store these documents. This would result into delays and was a big hassle to customers. With eKYC, the request and authentication both can happen online that will enhance customer experience to a great level.
Would you need to share additional documents after eKYC?
In most of the cases, whether you are buying an insurance policy or putting a service request, the eKYC will be sufficient. However, in some cases you may have to submit additional documents. "The customer might have to upload income proof under specific cases if needed," says Goyal of Probus Insurance. This happens mostly when customers are buying a policy with higher insurance cover.
Safeguard for privacy concerns
Compared to a paper trail, which changes many hands, in digital mode the human intervention is nil which reduces lot of privacy-related concerns. "eKYC is a step towards a paperless business model in the insurance sector. The elimination of paper-handling adds to securing the privacy of personal information. As the requests are generated from a customer's phone on a secure network, utmost security and privacy of policyholders' data are assured," says Lavanya of Max Life Insurance.
When it comes to the safety of the digital communication, lot of safeguards have been put in place to ensure it is a secured exchange of information. "The UIDAI has introduced a system of creating Virtual ID -- a temporary, revocable 16-digit random number mapped with the Aadhar Number, which can be used as a substitute of the 12-digit Aadhar Number during the authentication process of any service. This is being done for every transaction in order to strengthen the privacy of the personal information of the customers who are buying the policy," says Goyal, of Probus Insurance.
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