Insurance watchdog IRDAI makes KYC details mandatory while purchasing insurance from Jan 1

The Insurance Regulatory and Development Authority of India (IRDAI) has mandated that all policyholders must provide their Know Your Customer (KYC) details when purchasing any type of insurance policy from January 1, 2023. This requirement applies to all individuals and entities purchasing insurance in India and is intended to ensure that insurance companies have accurate and up-to-date information about their policyholders. Providing KYC details helps to prevent fraud and money laundering, and ensures that policyholders receive the full benefits of their insurance coverage. It is important for policyholders to comply with this requirement in order to avoid any delays or issues with their insurance coverage. 

Currently, KYC documents are only required when making a claim worth over Rs 1 lakh. Under the new insurance rule, KYC documents will be required even while purchasing a new policy.

Sanjiv Bajaj, Jt. Chairman & MD, Bajaj Capital Ltd says there are several benefits for both policyholders and insurance companies as a result of the mandatory KYC requirement.  He lists out following benefits for policyholders and insurers: 

Improved protection against fraud: Providing KYC details helps to verify the identity of policyholders and reduce the risk of fraud. This is especially important for those purchasing life insurance, as it helps to ensure that the policy is being taken out by the intended person and not someone fraudulently using another person's identity. 

Enhanced security: Having accurate and up-to-date KYC details on file helps to ensure that policyholders' personal and financial information is secure. This is especially important in today's digital age, where personal information is increasingly at risk of being compromised. 

Efficient claim process: Accurate KYC details can help to speed up the claim process in the event that a policyholder needs to make a claim. This is because insurance companies will have all the necessary information on file, which can help to streamline the process and ensure that policyholders receive the benefits of their coverage in a timely manner. 

For insurance companies:

Reduced risk of fraud: Having accurate KYC details on file helps insurance companies to better identify and prevent fraud. This can help to protect the company's financial stability and reputation. 

Improved risk management: Accurate KYC details can help insurance companies to better assess and manage risk. This is because having more information about policyholders allows the company to more accurately assess the likelihood of a claim being made and to set appropriate premiums. 

Enhanced customer satisfaction: By providing a more efficient and secure process for policyholders, insurance companies can improve customer satisfaction and build stronger relationships with their policyholders. This can help to attract and retain customers, which is essential for the long-term success of the company.
 

Also read: LIC cautions users against fake information with regard to penalty charges for KYC update

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