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New IRDAI Regulations for KYC in Car Insurance

  • Author :
  • TATA AIG Team
  • Published on :
  • 05/10/2023

Beginning 1st January 2023, India's Insurance Regulatory and Development Authority (IRDAI) mandated Know Your Customer (KYC) verification for all motor insurance customers. Aadhaar-based KYC, Digital KYC, Video KYC, and Central KYC (CKYC) are all acceptable forms of verifying a customer's identity.

Not just motor insurance but new health, travel, and home insurance policies also require KYC documents, regardless of the policy's premium.

Read this blog to discover how you can submit your KYC document for car insurance based on the new IRDAI notification.

What is KYC?

When opening a digital account, KYC confirms the customer's identity. This process involves gathering and verifying personal information, such as a person's name, address, and identification documents.

Every insurance policy in India requires KYC in insurance, as per the IRDAI guidelines. The authority has strengthened the KYC process to prevent fraudulent activities in the insurance sector, including the motor insurance industry.

Is KYC Mandatory for Insurance?

All insurance customers must undergo KYC during purchase to detect and reduce the insurance-related impact, like crimes such as money laundering.

Insurers must adhere to the separate KYC guidelines laid out by the IRDAI when conducting the KYC insurance process for individuals and judicial persons. Accordingly, all policies purchased from 1 January 2023 must comply with KYC norms.

Individual Policyholder KYC Guidelines

Individual policyholders should adhere to the following KYC norms.

  • A customer's identity must always be verified and authenticated by the insurer.

  • Insurers must not issue policies under an anonymous or fictitious name; insurers must take special care to avoid this.

  • New and existing customers must be identified through special procedures by insurers.

  • Insurance companies must verify customers' identities, addresses, and recent photos.

  • An insurer must ask customers for self-declarations when they want to submit a different address than what appears on their Aadhaar card.

  • Insurers can request customers who are unable to authenticate their Aadhaar owing to any injury, illness, or age to provide Officially Valid Documents (OVD).

Guidelines for KYC for Judicial Entities or Persons

The following are the KYC norms for judicial entities or individuals.

  • Taking all necessary steps to determine the client's identity and beneficial owner is a requirement for insurers.

  • Insurers can verify their legal status through the following documents.

  • A company or individual's name, legal form, and proof of existence.

  • The address of the registered office of the entity or person.

  • Personal representatives of such clients and beneficial owners who claim to be personally liable.

IRDAI Accepted Documents for KYC Relation in Car Insurance

You can submit your KYC for your insurance policy in several ways. Here is a brief description of each of them.

Online Aadhaar-based KYC authentication: Aadhaar is used to verify a person's identity. You can provide your Aadhaar number and biometric information for the KYC process.

Offline-based KYC authentication: When it comes to this authentication method, physical documents are used to verify a user's identity. You can include copies of your identity and address proof with the KYC application form.

Video-based identity authentication: To complete this process, you must provide the insurance company with your KYC information via a video call.

Permanent Account Number (PAN)-based KYC authentication: To authenticate your identity, you must provide your PAN. You should submit a self-attested copy of your PAN. A voter ID, passport, utility bill, and other documents that prove your address must also be submitted.

OTP-based e-KYC: To complete this process, You must enter the One Time Password sent to your verified mobile number. Insurers authenticate your identity by entering the OTP in the e-KYC form.

Documents Needed for KYC of Individual Customers

The following documents are accepted as part of the KYC process to complete the KYC process for insurance policies.

Identity proof: Voter ID, passport, Aadhaar card, utility bills, etc.

Address proof: Bank statement, rental agreement, utility bill, etc.

Photograph: A recent passport-sized photograph

Other documents: Depending on the insurer's requirements

What are the Benefits of the New Regulations for Insurers and Policyholders?

  • The insurers must ensure that policyholders are KYC compliant when purchasing insurance policies, so they will not have to ask for a KYC form for an insurance claim while making a claim. The claim settlement process will be sped up as a result.

  • Insurers can identify individuals better and curb crimes like money laundering with access to accurate KYC details.

  • A better risk assessment and management can be achieved when insurers have accurate KYC details. Furthermore, insurers can use this information to assess the probability of a claim and set appropriate premiums based on the likelihood of the claims.

  • As a result of more secure and efficient processes, insurers can improve customer satisfaction and build stronger relationships with their customers. Additionally, efficient operations can increase customer retention and attract new customers.

  • By centralising the data, policyholders get only the coverage they are eligible for. The insurers will have access to all insurance-related data of all policyholders, including insurance policies, claims made, claims settled, etc. Consequently, fraudulent claims will be reduced, and policy purchases and renewals will provide better service.

Buy Insurance for Your Car from Tata AIG

As per the MV Act 1988, all car owners should have valid motor insurance to be eligible to take their cars out on the road. But when it comes to purchasing an insurance policy for your car, what should you keep in mind?

The foremost thing that one should be aware of is finding a reliable insurance partner. An insurance company that offers a great claim settlement ratio, hassle-free claim process, and complete paperless processes. Tata AIG ticks all these boxes.

Buying Tata AIG’s car insurance is a smooth online process that allows you to buy motor insurance from the comfort of your home in just a few steps. Not only that, you can easily do car insurance renewals online from Tata AIG’s website.

Conclusion

Money laundering and terrorist financing are prevented in the insurance industry by these master guidelines by the IRDAI. Life and non-life insurance are now subject to the new rules, regardless of the amount of policy premium paid. With these new IRDAI regulations, the insurance process will be seamless and efficient, benefiting insurers and customers.

FAQs

What are the new KYC guidelines in IRDAI?

All types of insurance, including travel insurance, will be required to conduct KYC as of January 1, 2023.

Is KYC mandatory for the renewal of car insurance?

Yes. KYC is mandatory to renew car insurance.

What documents do I need for car insurance KYC?

Here is a list of approved KYC documents for car insurance KYC:

  • Adhaar Card

  • Driving Licence

  • Voter Card

  • PAN Card

  • Passport

Apart from these, if you have an NREGA card signed by a government official or a letter from the National Population Register containing your name and address, you can do your car insurance KYC.

Reference Links https://www.policybazaar.com/motor-insurance/car-insurance/articles/irdai-regulations-for-kyc-in-car-insurance/ https://www.personalfn.com/dwl/Insurance/new-irdai-regulations-for-kyc-to-buy-health-auto-and-other-insurance https://quickinsure.co.in/articles/new-irdai-regulations-for-kyc-in-car-insurance-in-2023

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Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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