The Know-Your-Customer (KYC) process is already implemented in the life insurance segment. Over there, KYC forms capture all the essential customer information such as name, contact number and address, making it easier for insurers to get in touch with policyholders.
Unfortunately, this practice has not made its way into the general insurance industry yet, as there are no regulations stipulated for it. The general insurance industry has been pushing for this reform for several years with the insurance regulator – Insurance Regulatory and Development Authority of India (IRDAI). The insurers had earlier sent representatives to the regulator seeking to resolve the issue.
Now, the regulator seems to have finally acted upon this request. A new set of regulations are expected to be announced in the coming weeks, detailing the exact information that insurers will have to capture from customers. IRDAI has already stated that, any information pertaining to Aadhar can only be had with the consent of the customer.
Once the KYC regulations are introduced, they are expected to help improve the renewal rates in non-life insurance segments such as motor. Nearly 60% of vehicles running on Indian roads are uninsured, and even mandatory third-party insurance penetration is low, as customers don’t bother to renew insurance after the first year.
With this measure though, insurance companies will be able to contact customers regarding policy renewal. The information collected would also enable insurers to cross-sell various products in their portfolio.
Source: Money Control
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