Aadhaar must for Insurance policies to prevent money laundering: IRDA
To curb fraudulent claims & help with quicker settlements, policyholders have to link Aadhaar to their policies
The Insurance Regulatory and Development Authority (IRDA) of India on 8th November, 2017, announced that linkage of Aadhaar number to insurance policies is mandatory requirement under the prevention of money laundering rules for existing as well as for new policies. “IRDA clarifies that linkage of Aadhaar number to Insurance Policies is mandatory under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017. These Rules have statutory force and, as such, life and general insurers (including standalone health insurers) have to implement them without awaiting further instructions,” said IRDA in a circular.
In the month of September, IRDA had said authentication of policyholders or clients by insurance companies using Aadhaar number will be on a voluntary basis and with their consent. However with the recent circular, industry experts feels this is a good move which will prevent frauds and streamline the KYC process. Says Bhargav Dasgupta, MD & CEO, ICICI Lombard: “In my view, it is a progressive and logical step towards creating a unified platform for financial services and at the same time promote the government’s digitisation agenda. While there may be some short term challenges to overcome, we see significant long term benefits in terms of preventing frauds and streamlining the KYC process. As an organisation, we are committed to support this initiative and are aligning our processes to implement the guidelines in earnest.”
Concurs Jaideep Devare, MD, Mahindra Insurance brokers: “The linkage of Aadhaar with insurance plans will prove to be beneficial especially during claims settlement for establishing the unique identity of the claimant thus reducing fraudulent claims, and also increase the speed of settlement.” Although digital platforms have paved the way for insurers to reach to the customers doorsteps with easy to understand insurance solutions, it has also led to increased efficiencies, real-time feedback, and service, besides it has helped reduce the turnaround time on claim settlements.
However the challenge remains towards adapting new strategies. Says Joydeep Roy, Leader-Insurance practice, PwC: “Insurance companies now have to rethink their strategies from customer-interface as well as from the distribution side. Also their back-end processes would have to make sure that they are really geared to record the Aadhaar card. Going forward this move will help insurance companies to penetrate even further.”
Also for the insurance companies who are trying to increase their penetration the challenge for them remains towards making people understand the importance of Aadhaar card while buying insurance policies. “Every citizen who buys insurance policies should have a valid Aadhaar card, also people in the deeper-rural segments should be made aware of Aadhaar card and it’s utility that it’s a unique identity that they will carry. These are the two things which would probably require some more time. However, the first step is welcome move which will definitely help all the policyholders going forward.” explains Devare.