KYC for Travel Insurance: All You Need to Know

Why is KYC Mandatory for Buying Travel Insurance?

Until January 1, 2023 KYC was an optional choice for customers purchasing general insurance. According to the guidelines issued in August 2022, Insurance Regulatory & Development Authority of India has made KYC compulsory to protect the insurance sector from money laundering and other fraudalnt activities. All travel insurance companies in India will now require customers to fill a KYC form.

The move will help identify real users from frauds before companies can provide them their insurance benefits. It will also aid insurers in risk assessment of their customers, helping them price their travel insurance products depending on low- risk, medium-risk and high-risk customers.

KYC checks will also provide a detailed database of customers that will accelerate claim settlements and carry them in a seamless manner. As the company will already have customer’s important documents, it is expected that KYC won’t be required during the claim process.

IRDAI-approved KYC Procedures for Travel Insurance Customers

According to IRDAI’s guidelines on Anti-Money Laundering/ Counter Financing of Terrorism (AML/CFT),there are different ways through which insurers can conduct the KYC check of their travel insurance customers:

• Aadhaar Card-based KYC: This can be done using an online or offline authentication process
• Digital KYC: Can be done according to the Prevention of Money Laundering (PML) Rules
• Video Based Identification Process: Also called VBIP, this is a consent-based identification of the customer
• KYC Identifier: Using the unique pin allotted to the customer by the CKYCR (Central KYC Registry)
• OVDs: By providing officially valid documents to the insurer
• PAN Card or Form 60: As per the application, either can be used

KYC Documents Required to Buy Travel Insurance

Given below are the KYC documents that can be used to buy travel insurance policy:

• Election Commission Voter ID Card
• Aadhaar Card
• Driving License
• Passport
• Ration Card with Address, and photo of the person
• NREGA Job Card signed by a state government officer
• Letter by National Population Register consisting of demographic details
• Other documents notified by the central government after consulting the IRDAI

Please note that proof of identity and proof of address may vary, so carefully go through the list of approved documents as per the government guidelines.

KYC Norms to be Followed by Travel Insurance Companies

The IRDAI has issued some essential KYC norms that must be followed by travel insurance providers in India. These have been briefly given below:

• Insurers must ascertain their customers’ true identity to the best of their ability
• They must implement effective methods to obtain necessary details of their customers for correct identification
• Insurers must make sure that no policy is issued under fictitious/anonymous names
• Providers must verify their customers’ identity, address and obtain recent photograph
• For juridical people, insurers must
• Take steps to identify the customer as well its beneficial owner for verification.
• Check the legal status of the juridical person should be identified and verified through various documents
• Cross-check if the person appearing to act on behalf of the juridical person is authorized
• Insurers must get self-declaration from customers who provide a current address different from the one mentioned in Aadhaar
• Providers should also check Officially Valid Documents of customers who can’t undergo Aadhaar authentication due to genuine reasons like age, disease or injuries
• Insurers must collect relevant customer information from different sources, including agents
• Insurance providers must ensure that the cost of the customers’ premium is not disproportionate to their income
• In case the insurer is not satisfied or finds an issue with the true identity and transaction of the customer, they must file a STR (Suspicious Transaction Report) with Financial Intelligence Unit-India (FIU-IND)

Wrapping it Up,

All life and non-life insurance policies will now involve KYC check. Be it buying or renewing an insurance plan, customers should prepare relevant documents to meet this mandatory requirement. Don’t forget to to go through the list of KYC documents before buying your next travel insurance policy.