Earlier, insurance policies were issued in physical mode only, irrespective of whether a policyholder submits a proposal in physical form or online. Further, the policyholder was required to go to the respective Insurer’s office for all the policy servicing needs. Owing to this, the entire process was cumbersome, time consuming and involving incidental expenses. Since all the policies were issued in physical form and not usually collated at a single location, the matter got even more complicated on untimely demise of the policyholder. The dependents normally had hard time in identifying all the insurance policies and making claims with various insurance companies.
In order to overcome this difficulty and to collate and keep a safe custody of all the insurance policies of an individual at a single location, de-materialization of insurance policies is conceived. The insurance policies including the existing ones can be converted in an electronic form and held with an ‘Insurance Repository’. Activation of e-Insurance Account with Insurance Repository and all servicing would be offered ‘Free of cost’ to the policyholder.
Hence, the needs for a single point approach to Know Your Client (KYC) with the use of an online platform.
Insurance Regulatory and Development Authority (IRDAI) issued a circular in which it has instructed insurance companies to upload the KYC information of their policyholders on its platform – Insurance Transaction Exchange (iTrex) developed by IRDAI by April 20.
Currently, 10 insurance companies have uploaded the status of KYC on iTrex. In the circular, IRDAI has said, “It may be appreciated that the iTrex will not only facilitate aggregating data across insurers but also help in identifying duplicates within the insurers as is evident in the ongoing exercise. It is imperative to complete this exercise and make it up-to-date at the earliest. Data relating to KYC related details of insurance policies up to 31st March, 2016 also needs to be captured at an early date. For policies issued subsequent to 31st March, 2016, it is proposed to make the upload possible by web service.”
List of valid KYC documents:
o Identity Proof (Any One)
o Address Proof (Any One)
Voter ID Card
Bank Passbook (not more than 6 months old)
Verified copies of
Further, the insurance regulator has clarified that insurers who don’t comply to this circular cannot avail the benefits of iTrex. Currently, separate KYC is needed for different insurance policies. For instance, separate KYCs are required to buy a term insurance plan and a health insurance plan. Many insurance advisors feel that the existing complications in KYC norms are, to some extent, proving to be deterrent for new investors to buy insurance policies. This is a cause of concern for the insurance industry. To tackle this issue, IRDA had set up iTrex to facilitate data exchange between the repositories and insurance companies. A policyholder having an electronic Insurance Account (eIA) need not undergo multiple KYC.
IRDAI is planning to leverage iTrex to introduce uniform KYC in physical policies too. Earlier, T.S. Vijayan, IRDAI Chairman had said, “We are working on a project with Insurance Transaction Exchange (iTrex) to introduce uniform KYC in the insurance industry. This will help intermediaries in a big way.”