Soon, you will be able to buy a fresh life or general insurance policy completely online, without having to step out of your house or meet an intermediary physically to hand over signed identity documents.
The Insurance Regulatory and Development Authority of India (IRDAI) has permitted insurance companies to issue policies on the basis of a video KYC (know-your-customer) process. Moneycontrol had first reported the regulator’s plan of allowing insurers to adopt video-based KYC for policy issuance. It has already allowed insurers to use digital modes for validating policyholders’ signatures on documents.
Earlier, the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI), too, had allowed entities such as banks and mutual funds to use video-based tools to complete the mandatory KYC process. The Pension Fund Regulatory and Development Authority (PFRDA) has also permitted distributors to use video KYC for onboarding National Pension System (NPS) subscribers.
Let’s understand IRDAI’s latest move and what it means for policyholders.
What is video KYC?
A video KYC is done to make sure the person buying an insurance policy is a real and alive. It allows an insurance official to see you through a live video over the internet. Insurance companies – life and non-life – can now use a video-based identification process (VBIP) to obtain customers’ KYC documents, which is mandatory before issuing a policy. They will have to complete the process through their official technology platforms that facilitate recording videos of policyholders for the purpose. “Insurers may undertake live VBIP by developing an application that facilitates the KYC process either online or face-to-face in-person through video,” IRDAI said in its circular.
How will the process be carried out?
Either the insurers’ staff or authorised representatives can record a ‘clear, live’ video of policyholders at their homes and obtain identification information. “Discussions around implementation are still on. Approaches could vary as per the company. The first option is to enable advisors to visit the prospective policyholder’s house, connect her to the insurer’s employee through the official app and record the video KYC process as per IRDAI’s guidelines. The second option is to send a weblink to the policyholder who will use it to log in online At the other end, the insurer’s employee will record the identification process,” says Anilkumar Singh, Chief Actuarial Officer and Appointed Actuary, Aditya Birla Sun Life Insurance.
As a customer, you can choose to share your Aadhaar information or any other officially valid document such as passport and driving licence. If you have signed up for the Digilocker facility, you can submit a digitally signed copy. Or, you can simply share it in the form of a clear photograph or a scanned copy of the original document, through the e-Sign mechanism. Your live location will also be captured, along with the date and time-stamp. “Geotagging is a must. The KYC process is valid only if the prospective customer is in India,” says Vaidyanathan Ramani, Head, Product and Innovations, Policybazaar.com.
At your end, you should also ensure that your face is clearly visible in the video and not covered it in any way.
How will it help policyholders?
In these COVID-19 times, you will not have to risk visiting an insurance company’s branch or agent’s office to complete the policy purchase process, including KYC verification. Insurers are yet to roll out the process. Once they do, it is likely that you will have to access the insurer’s platform via a link or app shared by the company. You will have to answer questions via a video instead of doing so physically, besides sharing KYC documents online to complete the process. “The questions could be dynamic. Since one of the purposes is to establish that the person is alive, questions could be devised in such a way that responses cannot be standard,” says Vaidyanathan.
While the onus of executing a secure transaction is on the insurer, on your part, ensure that you are dealing with authorised representatives of the company and the video is being recorded through company-authorised channels.
Will policyholders have to incur any cost to complete the process?
There is no additional cost for the video KYC verification process. “For insurers, however, virtual KYC will bring down the overall costs that the process otherwise entails,” says Vaidyanathan.