Insurance providers can currently use a customer’s Aadhaar to identify them with consent management thanks to the UIDAI framework. However, in the absence of Unique Customer Identification in the insurance sector, insurance companies face a variety of challenges in providing services and claims, including ease of onboarding consumers, avoiding potential fraud, and so on, according to the IRDAI circular.
Presently, the UIDAI framework allows insurance companies to identify the customer by using his/her Aadhaar with consent management.
Besides the simplicity of customer onboarding and avoiding potential fraud, there are problems with providing the services and making the claims.
The IRDAI circular stated, “Here are the proposed terms of reference for the committee may be as follows:-
i) Suggest measures for ease of onboarding of customers using Aadhaar,
ii) Suggest measures for fraud management at Underwriting and Claims stages
using Aadhaar.
iii) Facilitate eKYC / Off-line KYC by Insurers, Intermediaries and Agents.
iv) Suggest measures for improving traceability of customers / beneficiaries to
reduce unclaimed amounts of policyholders.
v) Facilitating insurers to access National Death Registry using Aadhaar.
vi) Linking of ABHA ID with Aadhaar.
vii) Facilitating insurers to access Annuity Life Certificates (Jeevan Pramaan).
viii) Facilitating insurers to access Bank Account Details of Policyholders by linking
Aadhaar Number (similar to CKYC).
ix) Facilitating “Reverse Seeding” by insurers where Aadhaar is not available.
x) Facilitating pay-outs to policyholders through Aadhaar Payment Bridge.
xi) Facilitating provisions for enabling storing of Aadhaar of Policyholders by
Insurers
xii) Any other related or allied matters.
In a press release dated April 24, 2020, IRDAI authorised a list of insurance companies to use online Aadhaar verification from UIDAI to validate customers’ KYC details.
Irdai has made KYC norms mandatory for the purchase of all new insurance policies, irrespective of their premiums, starting January 1, 2023. This rule will apply to all types of insurance — life, general and health insurance.