Role of KYC in Health Insurance

Vote: 1

Know Your Customer (KYC) is a mandatory process when availing health insurance. It requires verifying a policyholder's photo identity and address to prevent fraud, ensure regulatory compliance, and facilitate hassle-free claim settlements.


The Insurance Regulatory and Development Authority of India (IRDAI) has made KYC mandatory for all new and renewal health policies since January 1, 2023, as reported on The Economic Times.


What is the Role of KYC in Health Insurance?


KYC has become mandatory for health insurance because:



  • Transparency and Trust


Health insurance agencies need to deal with the confidential information of customers. So, they should confirm the legitimacy of their customers' data, in both ways: individuals and organisations. It helps develop transparency and trust between the insurer and the insured.



  • Fraud Prevention


When you add a photo and upload address proof to your insurer, the chances of fraudulent activities such as identity theft, fake claims, and the misuse of policies are reduced. Your insurers know that the policyholder is a genuine individual, which helps make the claim settlement smoother.



  • Regulatory Compliance


Insurance companies must comply with strict national and international anti-money laundering (AML) laws and guidelines. Regulatory bodies such as the IRDAI set these rules. Complying with these helps companies avoid legal penalties and develop a secure and trustworthy financial ecosystem.



  • Faster Claim Processing


By uploading accurate and updated KYC details, you can make the claim settlement process smoother and faster. The insurer does not need to invest time and resources to re-verify the policyholder's identity and details during a health emergency.


What Documents Need to Be Submitted for KYC in Health Insurance


For KYC, you need to submit the following documents for insurance:



  1. Identity proof



  1. Address proof



  1. Passport



  1. Aadhaar card



  1. Driving license



  1. Voter ID



  1. National population register letter



  1. NREGA job card



  1. One recent passport-sized photograph


What is CKYC in Health Insurance?


CKYC or Central Know Your Customer is India's single, centralised database for your KYC details. After an individual submits KYC documents, they get a unique CKYC or KIN number. Policyholders can use this 14-digit identifier instead of uploading actual KYC documentation.


Besides, banks, insurance companies, and non-banking financial companies can use CKYC or KIN for verification, eliminating repetitive submissions and speeding up policy onboarding or claims.


What is the Procedure for Completing CKYC?


To complete CKYC, whenever you intend to buy any kind of financial product from financial entities regulated by RBI, SEBI, IRDAI or PFRDA, submit the following documents:



  1. CKYC application form



  1. Identity and address proof (whether it is your Passport, Driving license, Aadhaar number)



  1. PAN details



  1. One recent passport-size photo


As soon as you upload all the details, you will receive a unique 14-digit Identification number.


The above-mentioned institutions will share your KYC details with the CERSAI (Central Registry of Securitisation and Asset Reconstruction and Security Interest of India).


To check whether you are CKYC compliant, you need to verify that you receive the 14‑digit CKYC number. You get this number once you have completed the KYC formality. Also, you can confirm compliance by checking the online portals of your insurer that provide CKYC status.