Video based KYC in Insurance Sector

If we look back into the history of Indian Insurance Companies, the first insurance company started in Kolkata in the year 1818, followed by companies set up in Madras and Bombay between the years 1823 to 1829. And in the year 1972, all the general insurance companies were nationalized and merged into 4 Insurance companies. A major amendment made in the year 2000 was when the government permitted private sector into this business and simultaneously with IRDAI ( Insurance Regulatory and Development Authority of India) coming in as a supreme authority under whose governance the Indian insurance Industry functions.

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Today, wehave around 57 insurance companies among which 24 Life insurance and 33 being Non-Life Insurance companies in India.

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The Insurance industry with its  deep roots needs to transform and adapt to the changing needs of the people as they are becoming more and more digital.

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Role of Digitalization in Insurance Companies:

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Traditionally, there was a lengthy procedure when a customer had to purchase an insurance policy. This  was completely manual and paper based system that was time consuming and  tedious.

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The process was outdated and there was a lot of inconvenience for the customer and also to the insurance company / executive concerned. This resulted in customer churn and also led to higher operational costs.

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Today, digital technology has made process easier and  customers can purchase their Insurance policies ,pay premiums and renew their policies online.

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In the recent times, with the COVID crisis, it’s proved that Digital First strategy in line with Digital Transformation helps organizations to operate efficiently. Companies that have adopted the digital has minimum impact of the crisis on  their businesses. In particular, the  BFSI, Telecom and other prominent sectors who transformed their businesses digitally are infact heading towards Unmitigated Digitalization.

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IRDAI to permit Video-based KYC in Insurance Domain:

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According to the recent update, IRDAI is on its way to permit Video-based KYC system for both the Life & General Insurance Companies. With Video-based KYC coming into force, there is a scope of immense increase in the ratio of  insurance policies being sold out directly to the customers and the insurance business is expected to increase in near future. The reason being the convenience of having Policy copy immediately enabled by Video-based KYC.

As more and more people opt for online insurance, the industry will see a significant growth while securing the assets of the people.

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Expected process of the Video-based KYC:

1. An authorized insurance official will contact the customer through audio-visual to verify the authenticity of the customer and the information provided in the application submitted.
2. This process applies for both the Life & General Insurance domains
3. All the conversations will be Geo- Tagged in order to confirm the exact location of Customer
4. Video-based KYC call will be initiated only through the concerned Insurance domain from whom the customer is purchasing the policy and any other personal calls from people who claim themselves to be the employees of the insurance company willnot be entertained. This will help the customers to identify the fraudsters in the market.
5. This policy helps insurance companies to reduce the cost of the expenses incurred in doing customer’s KYC process
6. When the expenses are reduced, the insurance companies may also charge lesser to the customers.
7. This Video-based KYC will avoid the third parties involvement like agencies, dealers etc and will provide customers with the direct access to the insurance authorities, which is time saving ensuring a transparency in the process.

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