IRDAI Permits the Insurers to Have Video-Based KYC for Onboarding Customers

The IRDAI has permitted general insurance as well as life insurance companies to have a Video-Based Identification Process (VBIP) for onboarding of their new customers. This modification is permitted for enhancing the ease of performing KYC and thus help the insurance sector that is battling with the effect of the Coronavirus pandemic currently.

What is the Video-Based Identification Process (VBIP)?

Video-Based Identification Process is a method to perform the identification of the customers by insurance company’s representative. It is consent-based, real-time audio-visual interaction with the onboarding customer for obtaining his/her identification information, as well as required documents, and to determine the accuracy of the provided information.

In its letter to the insurance companies, the Insurance Regulatory and Development Authority of India has said that VBIP is for simplifying the Know Your Customer process. It has suggested the insurers use different electronic platforms for VBIP and make it more customer-friendly so that there will be an improvement in the ease to do business.

So, the insurance companies in India may use the VBIP as an a medium, which can further elaborate on the ease of performing KYC – the letter further mentions. In addition to this, such processes must be considered as face-to-face interaction as per this letter.

According to a top executive of an insurer, who has seen the letter that is sent to insurance companies, the draft guidelines are out and some feedbacks are being expected from the industry and then the final guidelines will be released. He further added that the matter is still under the purview of the IRDAI.

The Process Will Be Consent-Based:

The IRDAI further explains that the insurance providers can develop their applications and thus can easily undertake live Video-Based Identification Process (VBIP). This live VBIP can be carried out by an authorized person of the insurance provider for the establishment, verification, and continuation of a relationship that is account-based with every individual customer after taking his/her informed consent.

The letter further says that the authorized person of the insurance provider, who will be performing VBIP for Know Your Customer, has to record the video and click the live photo of the customer who is present for identification and get the information on the identification. 

It is the responsibility of the authorized person of the insurance provider to ensure that the video is of good quality and the customer who is in the video will easily be recognized and shouldn’t be covering the face in any way. It says that the addition of the live location of the customer or geotagging has to be captured to make sure that the customer is present physically in India.

In addition to this, it has to be ensured that the customer’s photo in the Aadhaar card matches the person undertaking the Video-Based Identification Process and the details of identification in the Aadhaar card should match with the details that are provided by the policy seeker.

The letter as well states that the authorized person of the insurance provider should facilitate this VBIP at the customer end only.

It further added that the utmost responsibility for due diligence of customers will be in the hands of the insurance provider.

Commenting on this decision of IRDAI, the Policybazaar.com, Life Insurance Sector’s CBO, Santosh Agarwal, said that the primary objective of VBIP KYC is for registering the customers with a minimum amount of paperwork and within the least time that is possible.

This facility will allow the customers to continue investing in insurance products without compromising personal safety, he further says.

Agarwal added that the Video-Based Identification Process will for sure turn out to be one of the most beneficial in this pandemic when all the authorities are asking to stay at home and maintain social distancing.

New Opportunity for Technical Start-ups:

Since the insurance companies will be requiring an application or platform for implementing VBIP, so the technology start-ups which will be offering this facility will be seeing a new opportunity for their businesses.

The tech start-ups that are working with the banking sector to provide the VBIP KYC platform will be on the upper-hand because of their experience.

The insiders of the banking industry have pointed out that the onboarding of customers through a digital platform is already blooming in the banking sector and thousands of accounts are being opened through this method.

A start-up of Mumbai who is working with approximately seven banks for providing digital KYC platforms is hoping to get more business with insurance companies in India.

The IRDAI has warned that the system should be audited first and all the security protocols should be strengthened for ensuring that there will not be any scope of the fraud. Additionally, the regulatory has also made it compulsory to geo-tag all the conversations so that it will be easy to track the location of the customer and every video call has to be originated from the domain of the insurance company only.

Summing It Up!  

The VBIP for KYC will be having two major impacts – one, it will reduce the cost of performing KYC of customers, and second, there will be a direct connection with the customer instead of involving an agent or some distribution network to this job.

If the average price of customer KYC comes around Rs.250, in the video-based KYC process, it will come down by at least 10%.  

The complete digitization of the insurance purchase process will be a new experience for all the policy-seekers as well as insurance companies in India. This will reduce face – to – face interaction and there will not be any requirement of paper signatures, which is the need of current time. By maintaining social distance and less contact with people we can reduce the spread of coronavirus, the current pandemic.