The insurance industry is undergoing regulatory updates to ensure transparency and a quicker onboarding process. Before now, KYC was only necessary when filing a claim and was not required. This article discusses the various KYC procedures used in car insurance under the new rules.
What Does KYC Mean For Car Insurance?
Before engaging in any financial transaction, such as opening a bank account, sending money electronically, or buying car insurance, the insurer must verify the customer’s identity and address through a process called KYC, or “Know Your Customer.” The insurer requires supporting documents, such as a PAN card, an Aadhaar card, a photo ID, and proof of address, to verify a customer’s identity and address. Regular KYC updates ensure customer authenticity and stop any potential money laundering. [1]
What Kinds Of Documents Are Necessary For KYC?
Officially Valid Documents (OVDs) are identification documents used to confirm customers’ identities. Six documents that can be used for the KYC process have been designated by the government as OVDs, as listed in the table below:
- ID verification
- Aadhaar card, voter ID card, driver’s license, or passport
- PAN Card
- Proof of address, lease agreement, ration card, house maintenance bill, driver’s license, and four-wheeler insurance copy
- Utility bills, such as phone, gas, and electricity bills
- Financial statements
What Are The Various KYC Processes That The IRDAI Has Approved?
The IRDAI has approved different kinds of KYC procedures for customer identification. #
They are as follows:
Document-Based KYC
To be verified in person, the customer must physically present the KYC-required documents, such as proof of identity and address. It is a successful method because there is less room for error, and the customer must be physically present for identity confirmation.
Offline KYC
Although they are distinct, offline KYC and physical KYC are frequently confused. Offline KYC uses a database instead of biometrics to confirm the customer’s identity. The customer completes a KYC form and attaches the necessary paperwork. A KRA (KYC Registration Agency) receives this form, and it issues an application number that can be used to check the status of KYC. Insurers can access the customer’s information that the KRA has stored on its system.
Online KYC
The customer registers on the KRA website and provides information such as name, address, and date of birth, along with an Aadhaar number and registered contact number for online KYC. By entering the OTP that was sent to the registered number, all of the documents are verified. The customer then accepts the e-KYC declaration and uploads a self-attested copy of the e-Aadhaar. Biometric authentication is also used when conducting online KYC.
Video KYC
The customer’s physical presence is unnecessary during this entirely digital and paperless process. Through a web portal or web app, the customer submits all the necessary documents and completes a video verification. Using a mobile phone, video verification is simple to complete. This procedure allows for easy customer onboarding and is a fast KYC procedure.
A car insurance calculator is an easy-to-use tool to determine the amount of premium you would need to pay.
# Visit the official website of IRDAI for further details.
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