In a circular sent to all general, health and life insurance companies last month, the regulator said that companies can use video-based identification process (VBIP) as an electronic medium to enhance ease of completing the know your customer (KYC) process. Mint has reviewed a copy of the draft guidelines, which are open for the stakeholders’ feedback.
The insurers shall develop their application and undertake live VBIP carried out by an authorized person appointed by the insurer for the establishment, continuation and verification of account-based relationship with the prospective customer. “This is very similar to the onboarding process being followed by banks. Something on the same lines is already prevalent and insurers call it pre-issuance verification call (PIVC). Irdai is now looking at giving video-based verification a formal nod," said Santosh Agarwal, chief business officer, life insurance, Policybazaar.com, an online insurance aggregator.
The regulator has suggested certain rules for undertaking video KYC, which insurers are expected to follow. The authorized person of the insurer performing the VBIP for KYC shall record video as well as capture a live photograph of the customer present for identification and obtain the identification information. Insurers can use offline verification through Aadhaar for identification, if it is submitted by the customer. If not, insurers may perform OTP-based Aadhaar e-KYC authentication if the customer voluntarily submits the same, subject to a notification by the government under Section 11A of the Prevention of Money Laundering Act.
Insurers also have to ensure that the video is clear and the customer is easily recognizable. Further, the customer’s live location shall be captured through geo-tagging to ensure he or she is physically present in India.
Insurers will also have to ensure that the photograph of the customer in the Aadhaar card matches with the person undertaking the VBIP and the identification details in Aadhaar match with the details furnished. Companies will also have to make sure that the sequence of questions asked during the video KYC process is varied to make sure that the interactions are real-time. In case of offline verification of Aadhaar, insurers shall ensure that the generation of XML file or QR code is not older than three days from the date of VBIP.
Also, accounts on-boarded via VBIP shall be operational only after being subject to audit, underwriting and verification to ensure the integrity of the process.
“To ensure security, robustness and end-to-end encryption, the insurers shall carry out software and security audit and validation of the VBIP application before rolling it out," said the regulator in its circular. Insurers will have to trigger the audio-video interaction from their own domain and not from third-party service providers.
Earlier, in case of online purchase, OTP-based authentication was done and in case of physical purchases, wet signatures were required. “Video KYC will make offline processes redundant. Instead of getting physical signatures, the customer can fill the application form and complete the video KYC. With covid-19 and social distancing becoming the new normal, video KYC will help both insurers and policyholders," said Agarwal.
The move is in line with the digitization push that has come amid the pandemic. Irdai has asked for feedback from stakeholders and the final circular is expected soon.