To confirm the legitimacy of prospective consumers, all auto insurance firms adhere to the KYC, or “Know Your Customer,” process. Due to the implementation of more stringent rules, KYC is now necessary in order to get car insurance coverage. You’ll learn all there is to know about auto insurance.
What is the Purpose of KYC?
The main objectives of a KYC are to promote transparency, stop fraud, and stop money laundering. During the KYC process, the insurer requests important documents from the customer to verify their identity, and address, as well as additional identifying information. This facilitates the claims procedure and enables the insurer to precisely estimate the risk.
KYC aids insurance businesses in adhering to anti-money laundering regulations. Verified customer information on file deters persons from purchasing numerous policies using fictitious names or locations. Overall, KYC builds confidence between an insurer as well as an insured by confirming their legitimacy.
What Are the Key KYC Documents Required?
Identity evidence and address proof are the two sorts of documentation needed as a part of a KYC procedure. PAN cards, Aadhaar cards, voter identification cards, passports, and driver’s licenses are all acceptable forms of identification.
Ration cards, passports, bank statements, and utility bills can all be used as evidence of address. Customers must submit a minimum of one document per category. Depending on the profile, insurers may occasionally request extra papers for verification.
Types of KYC Processes
The Insurance Regulatory and Development Authority of India (IRDAI) has approved different methods of conducting KYC:
- Paper-based KYC: Customer submits physical copies of documents for verification.
- Offline KYC: Details are submitted digitally but verification is done without biometrics.
- Online KYC: The entire process from registration to verification is done online using Aadhaar-based e-KYC.
- Video KYC: Live video interaction is used to match face with ID proof in a paperless verification process.
Most insurers now support online and video KYC for ease and convenience. However, paper-based KYC is still used in some cases where digital methods are not feasible.
When is KYC required?
KYC is required per rules at the time of insurance policy purchase. Without finishing KYC procedures, the insurer would not be capable of providing the insurance paperwork. Additionally, to make sure that client information is current, KYC might require to be reissued frequently, often once every 10 years.
If the customer’s address or profile is altered, insurers may also request a new KYC procedure. The insurer might cross-check information with KYC data for verification during claims. Therefore, it’s critical that the consumer make sure their KYC is current and legitimate at all times.
Benefits of KYC
The main advantages of the KYC procedure for clients are as follows:
- Without delays, streamlined policy issuing
- Faster claims resolution since information is validated
- Protection from identity theft and fraud
- Multiple policies with the same insurer under one single KYC
- Convenience of choices for online or video verification
By facilitating improved risk assessment, KYC is also advantageous to insurers. In addition to helping the insurance comply with legal standards, it increases client trust.
For motor insurance, KYC is a crucial step in the client identification verification process. It speeds up other policy actions while assisting in the prevention of fraud. Customers have to be aware of KYC standards and make sure that the insurer has their most recent information. Insurance services are hassle-free if the KYC is correct and legitimate.
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