New Insurance Rules: KYC Mandatory for Health, Auto, and Other Insurance
Are you planning to buy a new health insurance, motor insurance, or travel insurance plan? If yes, then keep your Know Your Customer (KYC) documents handy. Starting 1 January 2023, the Insurance Regulatory and Development Authority of India (IRDAI) has made submitting KYC documents mandatory for the purchase of a new insurance policy. This rule applies to all types of policies irrespective of their features, inclusions and exclusions, and premium amount.
Here’s all you need to know about the new insurance rule and how it affects you.
The new KYC rule for insurance
Presently, it is not mandatory to provide KYC details to the insurance company when buying a non-life insurance policy. However, the revised rule requires you to submit your KYC documents even if you are buying non-life insurance such as health insurance, motor insurance, and travel insurance. This means you will have to provide your personal information such as your name, date of birth, and address to the insurance company when buying a new plan.
What does the new rule mean for a policyholder
The KYC process verifies the policyholder's identity, thus preventing instances of cheating and fraud. By making KYC norms mandatory, the IRDAI seeks to ensure that insurance benefits are given to the right person, and not to someone duping the system.
If you are an insurance policyholder, then complete your KYC process at the earliest to avoid policy cancellation and to enjoy the continuous benefits of insurance coverage. If you do not meet the KYC requirements, your policy may become invalid.
Meanwhile, if you are planning to buy a new policy, then you must complete the KYC process before you can get the policy.
How to Complete the KYC Process
Completing the KYC process online is a simple task. Just log in to your online account on your insurer’s website. Fill in the personal details under the KYC tab. Upload the digital copy of the government-issued identity document, and click submit.
You may also complete your KYC process offline by visiting your insurance provider’s branch office. There, you will have to fill in a KYC form and submit it along with your relevant identity proof. You will have to provide your personal information such as your name, date of birth, and address, along with the hard copy of your identity document.
If you don’t complete the KYC process in time, your insurance policy may become invalid and you may lose coverage. In such a situation, you will not be able to raise a claim in the event of a mishap. The whole purpose of investing in an insurance policy will be defeated.
How KYC affects different types of insurance
The new KYC rules apply to all insurance policies, including health, motor, and travel insurance. Whether you have a policy or are planning to get one, you must complete the KYC process.
Insurance of any type is important because it provides financial protection in the face of an unexpected event or emergency. Health insurance, for example, covers the cost of treatment during a medical contingency. Motor insurance, which is mandatory by law, covers third-party liabilities and own damage coverage in the event of a road accident involving your insured vehicle. Travel insurance covers unexpected expenses, as per the policy terms, during a trip. Most travel insurance plans cover flight cancellations and medical emergencies when you are away on a trip.
Why KYC matters?
During an insurance purchase, both insurer and the customer must trust each other. The insurance company must know the details of the customer they are covering, and the policyholder must be sure that their personal and financial information is secure. This is where KYC (Know Your Customer) comes in.
KYC helps insurers assess the risk involved in covering a customer and helps them determine if an individual is eligible for the coverage they want. On the other hand, customers must feel confident to give out their personal information to an insurance company. They must be assured that their details will be used for coverage purposes only.
The new KYC rule for insurance may look like a hassle to some, but it will prove to be a good move in the long run. Making the KYC process mandatory for policyholders will allow insurers to verify the identity of people applying for insurance and ensure benefits are extended to genuine policyholders. This move will help in preventing fraud. So, what are you waiting for? Complete the KYC process and get yourself and your family appropriate insurance coverage today.