Articles

If you plan to use Aadhaar-based e-KYC when buying insurance, here are some details that you should keep in mind

The Insurance Regulatory and Development Authority of India (Irdai) has said that Aadhaar-based electronic-know your customer (e-KYC) process would be sufficient for the purpose of customer verification. This has come as a part of clarification issued by the insurance regulator on Aadhaar-based e-KYC for insurance companies. It also stated that Aadhaar-based e-KYC can be conducted only with the consent of the customer.

If you plan to use Aadhaar-based e-KYC when buying insurance, here are some details that you should keep in mind.

KYC for insurance
For life insurance products, regulatory guidelines mandate that insurers conduct KYC before the sale of the policy in case of direct sales. If the sale is through other channels, such as online, KYC is to be completed within 15 days of the sale of the policy. These practices put the onus on the insurance companies to ensure that these products are not used for money laundering.

For non-life insurance products like motor and health covers, the anti-money laundering guidelines of the insurance regulator mandate insurers to do the KYC at the time of claims. Apart from this, KYC will apply only when the claim settlement is over Rs1 lakh.

The Unique Identification Authority of India (UIDAI) has specific regulations called Aadhaar (Authentication) Regulations, 2016, which explain the ways in which an individual’s details can be verified from the Aadhaar database. One such method is verification through a one-time password, which is sent to the individual’s registered mobile number. The entity requesting the authentication needs to get the OTP from the consumer and enter in the system to take the process forward. This means the authentication will not take place if the consumer does not share her OTP. This restricts unauthorised access to your demographic information.

Another method is through biometric authentication. In this the consumer has to provide biometric ‘proof’, say, finger print, at the respective device. The Aadhaar database gives access to the requesting entity only if the biometric matches the information available against the particular Aadhaar number in the database. This too helps prevent unauthorised access to information.

The insurance regulator has also stated that Aadhaar e-KYC can only be conducted with the consumer’s permission.

Aadhaar e-KYC for insurance
While Aadhaar-based KYC authentication was allowed, the insurance regulator has now said that this alone will be sufficient to complete the process.

This means that you do not need additional documents as proof for details such as identity, date of birth or address, if you provide Aadhaar. However, if the photograph in your Aadhaar is not clear, or there is a mismatch (for example, in photo, or name), the insurer can ask for additional documents. So, if you plan to use the e-KYC Aadhaar method, ensure that the details in your Aadhaar database are correct and updated, and that the photograph is clear.