Check Out the Mandatory KYC Documents for Health Insurance

The Insurance Regulatory & Development Authority of India (IRDAI) has made KYC (Know Your Customers) details mandatory to buy or renew health insurance plans in India as per the guidelines issued in August 2022. The new guidelines will come into force on January 1, 2023. Read on to know about the KYC documents required for health insurance.

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      Why IRDAI Has Made KYC Documents Mandatory for Health Insurance?

      The insurance regulator has made KYC documents mandatory to protect the insurance industry against money laundering activities. It can help to identify if an individual is real and can be trusted with their insurance services. It will also help the insurance companies to categorize their customers as low, medium and high-risk customers.

      Moreover, these KYC checks are expected to help insurance companies build a detailed database of their customers that will be beneficial in the long run. It can also help in a faster settlement of claims.

      List of Accepted Forms of KYC of a Health Insurance Customer

      The IRDAI has released the Master Guidelines on Anti-Money Laundering/ Counter Financing of Terrorism (AML/CFT), which lists the accepted forms of KYC. Take a look at the ways through which an insurer can conduct the KYC of a health insurance customer:

      • Aadhaar Card-based KYC using an online authentication process
      • Aadhaar Card-based KYC using an offline authentication process
      • Digital KYC as per Prevention of Money Laundering (PML) Rules
      • Consent-based Video Based Identification Process (VBIP) of the customer
      • Using KYC Identifier allotted by the CKYCR (Central KYC Registry)
      • Officially Valid Documents (OVDs)
      • PAN Card/ Form 60

      KYC Documents Required to Buy/Renew Health Insurance

      Here is the list of KYC documents required to buy or renew a health insurance policy:

      • Aadhaar Card
      • Passport
      • Voter ID Card
      • Driving License
      • NREGA Job Card signed by a state government officer
      • Letter by National Population Register consisting of demographic details
      • Any other document notified by the central government after consulting the IRDAI

      KYC Norms for Health Insurance Companies 

      The IRDAI has also issued certain KYC norms that should be followed by all health insurance providers in India. Take a look at these KYC norms below:

      • Insurers must make their best efforts to ascertain the true identity of a customer
      • Implement effective procedures to obtain the required details of new/existing customers for proper identification
      • Ensure that no insurance policies are issued under anonymous or fictitious names
      • Verify the identity, address and recent photograph of the customer
      • If the customer is a juridical person, take steps to identify the customer and its beneficial owner and verify their identity to the satisfaction
      • Identify and verify the legal status of the juridical person with the help of various documents 
      • Cross-check if the person appearing to act on behalf of the customer is authorized and verify their identity
      • Get self-declaration from customers who want to provide a current address different from what is mentioned in their Aadhaar Card
      • Check Officially Valid Documents of customers who cannot undergo Aadhaar authentication due to their age, injury or illness
      • Collect customer information from all relevant sources, including agents
      • Ensure that health insurance premium is not disproportionate to the customer’s income
      • File a Suspicious Transaction Report (STR) with Financial Intelligence Unit-India (FIU-IND) if the insurer is not satisfied with the true identity and transaction made by the customer

      Things to Keep in Mind While Conducting the KYC of Health Insurance Customers

      The following things should also be considered while conducting the KYC of a health insurance customer:

      • Conduct necessary Client Due Diligence (CDD) with the help of valid KYC documents for every new customer 
      • Conduct necessary CDD with KYC from time to time for existing customers based on the adequacy of previously obtained data
      • If the KYC of existing customers is not available, collect the KYC of low-risk customers within 2 years and other customers within a year.
      • Obtain PAN/ Form 60 of existing customers with an aggregate premium of Rs 50,000 or less for the continued operation of accounts
      • Carry out a risk assessment and ongoing due diligence of the customer when additional/ subsequent remittances are made
      • Carry out necessary due diligence before making claim payments to policyholders, beneficiaries or legal heirs
      • Ensure that proposals of Politically Exposed Persons (PEPs) are examined by senior management
      • Do not enter into an insurance contract with a person whose identity with any person on the UN sanction list or who has links with terrorists, terrorist organizations and banned entities

      In a Nutshell

      Just like life insurance, KYC documents have now become mandatory for buying or renewing general insurance, including health insurance. The master guidelines by the IRDAI lays out the processes and the accepted forms for conducting the KYC of a customer. So make sure to go through the list of KYC documents and keep them handy if you plan to buy or renew a health insurance policy.

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