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Planning to take up a new insurance policy? If you already have an Aadhaar card, here’s how it will help you in the process.
Quick KYC
First, it helps in speeding up the KYC (Know Your Customer) procedure. When you take a new policy, your photograph, name and address proofs will be taken by insurance companies. Aadhaar details can be used as one of the KYC documents for insurance companies to conduct basic due diligence.
Besides, the e-KYC process provided by the UIDAI (where you can authorise service providers to receive an electronic copy of your proof of identity and address) helps avoid submission of documents and makes the process customer-friendly. During the process, a request for a one-time password (OTP) is sent to the UIDAI’s repository. You then have to confirm the OTP received on your mobile number along with the Aadhaar number to the repository, which then confirms your identity, address, etc., to the insurance companies.
The e-KYC process comes in handy in the case of online insurance. In that case, you need not upload KYC documents on the website, but will just have to do an OTP-based verification of KYC when you submit the proposal form online. If you opt for e-insurance account (electronic policies), insurance buying becomes seamless end-to-end.
Helps underwriting
Having an Aadhaar card also helps sort out any queries the insurer may have or any clarifications that they may need at the time of taking the policy itself.
While the insurer can cross-check with any other previous policies based on name, date of birth or PAN, it comes with its own limitations. For instance, you may have spelled your name differently or taken an earlier policy with a different surname or you may not have a PAN card.
It is also not uncommon for people to register a different date of birth when joining school. But an Aadhaar number overcomes these limitations. Therefore, in order to generate the previous policy particulars, the Aadhaar number, if declared earlier, serves as a unique reference code.
Claim-related frauds
Aadhaar has the potential to prevent claim-related frauds in insurance. However, it requires a mature system, under which all service providers insist on recording the customer’s biometrics before enrolling a customer.
Also, if a central repository can be created about individuals, where the person’s history can be stored, including information like treatments taken in hospitals, claims history in the past, etc., it will help insurance companies prevent fraudulent claims.
Even in health insurance, such data availability about the customer’s health would be very helpful in fixing premiums and deciding claims on pre-existing illnesses.
The writer is Sr. VP (Compliance) & Chief Risk Officer, Bharti AXA Life Insurance
(This article was published on January 11, 2015