Everything You Need to Know About KYC Norms in Two-Wheeler Insurance
Amid the rising number of bike insurance fraudulent cases such as money laundering and terrorist financing, all the motor insurers now have to conduct background checks on their customers through KYC. Read on to know more about it in detail.Read more
Understanding KYC Norms
Recently, IRDA has launched Master Guidelines on Anti-money Laundering (AML) and Counter-financing of Terrorism (CFL). From January 1st, 2023 all the two-wheeler insurance providers will have to follow customer identification procedures while issuing a fresh bike insurance policy or at the time of bike insurance renewal.
No motor insurance provider can offer coverage to their customers without complying with these KYC norms. These regulations are mandated by the authorities to check the authenticity of applicants, which is beneficial at the time of claim settlement.
KYC Norms for Two-Wheeler Insurance Providers
Here is a list of norms that every two-wheeler insurer has to follow for both individuals and juridical people-
- All the general insurance providers have to obtain the applicants’ personal details to confirm the identifications of new or existing customers.
- Every customer has to submit identity proof, address proof, and a recent passport-size photograph to issue a two-wheeler insurance policy.
- Self-declaration is mandatory in case the individual wants to submit a different current address than the one mentioned in their Aadhaar card.
- Those individuals who are not able to complete Aadhaar-based authentication due to some illness, injury, or any other medical emergency, need to submit officially valid documents during the commencement of an account-based relationship.
- For existing policyholders, the insurers have to perform mandatory KYC. However, the Re-KYC can be done in 2 years for low-risk existing policyholders and in 1 year for high-risk existing policyholders.
For Juridical Person
For the juridical person, the insurer will verify their legal status through various means as listed below-
- Address of the registered office of the juridical person.
- The name, legal form, and proof of the existence of a juridical individual.
- Power of regulating authority of the juridical person.
- An authorized person who is purporting to act on behalf of a juridical client.
- Identity of the beneficial owner of the juridical.
Different Methods of KYC for an Individual
An insurer can follow any of the following KYC methods to issue a bike insurance policy to their customers-
- Aadhaar-based KYC- Authentication through two modes i.e., online and offline.
- Video-based KYC- Face-to-face verification is done through a video.
- Digital KYC according to Prevention of Money Laundering (PML) rules.
- CKYC- Registered in the repository by a unique Central Know Your Customer (CKYC) number.
- Through PAN or Form 60- By submitting Officially Valid Documents (OVD) along with PAN or Form 60.
Documents Required for KYC of an Individual
Here is a list of documents required as ID and Address proof of an individual-
|Documents Required for Proof of Identity||Documents Required for Proof of Address|
|Aadhaar Card||Aadhaar Card|
|Driving License (DL)||Driving License (DL)|
|Voter ID Card issued by Election Commission||Voter ID Card issued by Election Commission|
|Ration Card with Photo of the applicant||Ration Card with the address of the applicant|
|CGHS (Central Govt. Health Scheme) /ECHS (Ex-servicemen Contributory Health Scheme) Card||Photo Identity Card having registered address central government/ state government / PSU only|
|For rural areas- Gram Panchayat Residential Certificate issued by village panchayat head||For rural areas- Gram Panchayat Residential Certificate issued by village panchayat head|
|Certificate of address having photo issued by MP/MLA or Group-A Gazetted Officer in letterhead||Certificate of address having photo issued by MLA/MP or Group-A Gazetted Officer in letterhead|
|Income Tax PAN Card||Water bill of the last 3-months|
|MGNREGA card issued by Govt.||Electricity bill of the last 3 months|
|Caste and Domicile Certificate with photo issued by State Govt.||Telephone bill/mobile postpaid bill of the last 3 months|
|Smart card having photo issued by CSD, Paramilitary/Defence||Income Tax Assessment Order (ITAO)|
|Passbook issued by post office/any scheduled bank with a photo attached||Two-wheeler Registration Certificate (RC)|
|Pensioner Card with a photo attached of the applicant||Caste and Domicile Certificate with address and photo issued by State Govt.|
|Kissan Passbook with photo attached of the applicant||Pensioner’s Card with the address of the applicant
Kissan Passbook with the address of the applicant
|Photo Identity Card (of Central Govt./PSU or State Govt./PSU only)||MGNREGA card|
The Master Guidelines on Anti-money Laundering (AML) and Counter-financing of Terrorism (CFL) by IRDA will help the insurer to detect fraudulent activities and conduct a background verification of the client.
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