KYC Documents for Health Insurance

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.