What are the mandatory KYC documents for health insurance?

Posted on: Feb 28, 2023 | | Written by:

What are the mandatory KYC documents for health insurance?

Published on February 24, 2023. EST READ TIME: 4 minutes

People have different experiences with their Mediclaim policies. There are too many discrepancies and examples of the insurer and policyholder not being on the same page. For instance, there are many cases where the policyholders make false or exaggerated claims in order to receive higher payouts from their insurance providers. This is why it is important to promote responsible insurance practices. The Insurance Regulatory and Development Authority of India (IRDAI) mandates the submission of KYC (Know Your Customer) documents for health insurance policies, including all types of plans, such as family health insurance, as a measure to combat deception and money laundering. Let’s learn more about it.

Why IRDAI Has Made KYC Documents Mandatory for Health Insurance?

From Jan 1, 2023, the IRDAI has made it mandatory for existing as well as new customers to submit KYC documents while purchasing or renewing all types of insurance, such as healthcare, life and general insurance. The reasons are:

• First, by requiring customers to provide government-issued identification and proof of address, insurance companies can better verify a policyholder’s identity and ensure that the Mediclaim policy is not being purchased for illegal or unethical purposes.

• Second, KYC information is used to track a policyholder's demographics, such as age and income, which can help insurance companies better understand their customer base and make informed decisions about product design and pricing.

• Third, when insurers have a detailed profile of customers, the claim process will become more seamless and faster. At the time of claim settlement, policyholders need not submit aKYC form for a health insurance claim.

List of Accepted Forms of KYC of a Health Insurance Customer

The insurance provider can conduct the KYC of a health insurance customer in the following ways:

• Aadhar-based KYC using an online authentication process

• Aadhar-based KYC using an offline authentication process

• Video-Based Identification Process (VBIP) to conduct a face-to-face verification of the customer

• Using the 14-digit KYC Identification number allotted by Central KYC Registry

• PAN Card/Form 60

• Officially Valid Documents (OVDs)

KYC Documents Required to Buy/Renew Health Insurance

With effect from January 1,2023, the IRDAI has made the submission of KYC documents mandatory for buying/renewal of health insurance. If you are an existing customer and have not provided KYC details to your insurer, you should contact your insurance provider and provide the necessary information at the earliest. If you fail to do so, you may not be able to renew or buy a new health insurancepolicy.

The KYC documents you must submit are:

1. PAN Card/Form 60

2. Valid ID Proof: Any one of the documents –Aadhar Card/Passport/PAN/Voter ID/DL/NREGA job card signed by a state government officer/Letter from National Population Register containing the demographic details

3. Valid Address Proof: Any one of the documents – Aadhar Card/Passport/PAN/Voter ID/Driving License/Phone bill not older than 2 months/Bank Statement/Property or Municipal Tax Receipt/Utility bill, such as water bill, electricity bill/piped gas not older than 2 months)

4. Passport-size photograph

KYC Norms for Health Insurance Companies

As per the IRDAI, all health insurance companies have to follow certain KYC norms, such as:

• Verify the true identity, address and photograph of the customer

• Implement effective ways to get the required details of new/existing customers for proper identification

• Ensure the insurance policies are not issued to anonymous or fictitious names

• If the customer works in the judiciary, the insurance provider has to identify and verify the customer’s legal status

• If customers want to provide an address which is different from the Aadhar Card, they have to provide a self-declaration to the insurer

• If a customer is unable to do Aadhar authentication due to age, illness, or injury, the insurance company has to check the officially valid documents of the customer

• Collect information about customers from all sources, including agents

• Ensure the health insurance premium is proportionate to the customer’s income

• If insurers suspecta customer's true identity or transaction, they can file a Suspicious Transaction Report (STR) with the Financial Intelligence Unit-India (FIU-IND)

Things to Keep in Mind While Conducting the KYC of Health Insurance Customers

While conducting the KYC of health insurance customers, the insurance providers must keep in mind the following things:

• For every new policyholder, the insurer must carry outClient Due Diligence (CDD) based on the KYC documents.

• For existing policyholders, the CDD must be done from time to time based on the available information.

• For existing customers, the insurer has to collect the KYC form for Mediclaimwithin a specified timeframe, which is two years for low-risk customers and 1 year for others, including high-risk customers.

• Ask existing policyholders to submit PAN/Form 60.

• Before making claim payments to the insured, beneficiaries or legal heirs, the insurance provider must conduct necessary due diligence.

• The proposals of Politically Exposed Persons (PEPs) must be examined by the senior management of an insurance provider.

• An insurance company should not issue a policy to anyone suspected of having links with terrorists, terrorist outfits or banned organisations.

Conclusion

Whether you are planning to purchase a health insurance policy or renew it, keep in mind that it is now mandatory to submit KYC documents. The rule is applicable to existing policyholders, too, and they have to submit the required documents to the insurer to complete the process of KYC within the specified timeframe. If existing customers have not submitted the KYC documents, they should do it at the earliest; otherwise, they may not be able to renew or purchase the Mediclaimpolicy. You can collect the KYC form for Mediclaim from the insurer.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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