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When Rakesh Relan (name changed), 50, bought a money-back life policy around 20 years ago, he didn't provide documents for his age proof at that time as KYC was not mandatory then. When Relan went to claim his policy from the insurer after it matured after 20 years, he had to re-submit all of his physical documents to the insurance provider. Even then it took over a month for his claim to be settled.
But individuals can avoid delays or buy new insurance policies easily with e-KYC. The Insurance Regulatory and Development Authority (Irda) recently said that the e-KYC (electronic know-your-customer) services operationalised by the Unique Identification Authority of India (UIDAI) would be accepted as a valid KYC process for insurance. In other words, the Aadhaar card, which has all your details including age and biometric identification, can now serve as the sole valid document for customer identification.
This will help those people who bought policies a few years ago when KYC was not mandatory. Insurance companies are in the process of updating their systems to e-KYC.
Sanjiv Pujari, chief actuary of SBI Life Insurance, says, “The documentation process can be faster with e-KYC. This will be beneficial for life insurers and policyholders too.” It will not only render the administrative work paper-less but also reduce the turnaround time to sell policies and settle claims.
Says Harsh Roongta, certified financial planner, "e-KYC will help customers of a higher age get policies quickly. For instance, there are many who do not have a birth certificate to confirm their age, or those living in rented apartments don't have an established address proof to offer.”
So far, UIDAI has rolled out 460 million Aadhaar numbers. It is aiming at 600 million by early next year. For an e-KYC, one has simply to provide an Aadhaar number, after which one’s fingerprints are scanned to extract data to confirm that such details match those already recorded in the system. After this, a customer is not required to provide any further documents or photographs.
Usually in life insurance, the KYC of a nominee is also equally important as it can help avoid fraudulent claims. “It will reduce cases of fraud because, through e-KYC, a policyholder can maintain utmost privacy in choosing nominees and scanning and sending documents across to the insurer,” said an expert from the industry.
Vineet Patni, chief distributor officer at Bharti AXA Life Insurance, says, “If e-KYC takes off, all forms will be in electronic form and no physical documents will be required as that information will be captured electronically by an insurer.”
This e-KYC facility will not only greatly help investors to secure insurance cover, but will also help them apply for mutual funds and various pension plans available in the market.
