IRDAI Forms Task Force to Simplify KYC Using Aadhaar for Policyholder
MAS Team | 01 June 2023
The Insurance Regulatory and Development Authority of India (IRDAI) has taken substantial efforts to make the Know Your Customer (KYC) procedure for policyholders simple by leveraging Aadhaar. In a circular dated May 17, 2023, the insurance regulator announced the establishment of a task force dedicated to ensuring ease of doing KYC and addressing related challenges.
With the existing UIDAI framework, insurance providers can already use Aadhaar for customer identification with consent management. However, without a unique customer identification system in the insurance sector, insurers have significant challenges in providing services and processing claims efficiently. As stated in the IRDAI circular, these problems include customer onboarding, fraud prevention, and others.
To overcome these hurdles, the proposed terms of reference for the committee are as follows:
1. Suggest measures to simplify customer onboarding using Aadhaar.
2. Propose strategies to enhance fraud management during the underwriting and claims stages using Aadhaar.
3. Facilitate eKYC and offline KYC processes for insurers, intermediaries, and agents.
4. Recommend measures to improve traceability of customers and beneficiaries, reducing unclaimed policy amounts.
5. Enable insurers to access the National Death Registry using Aadhaar and link ABHA ID with Aadhaar.
6. Facilitate access to Annuity Life Certificates (Jeevan Pramaan) and policyholders' bank account details by linking Aadhaar.
7. Enable "Reverse Seeding" for insurers in cases where Aadhaar information is unavailable.
8. Streamline pay-outs to policyholders through the Aadhaar Payment Bridge.
9. Provide provisions for insurers to securely store Aadhaar information of policyholders.
10. Address any other related or allied matters.
In a press release issued on April 24, 2020, IRDAI authorized select insurance companies to utilize online Aadhaar verification from UIDAI for validating customers' KYC details, streamlining the verification process.
As of January 1, 2023, IRDAI has made KYC norms mandatory for all new insurance policies, regardless of their premiums, encompassing life, general, and health insurance.