Uniform KYC in insurance industry is likely to become a reality soon. IRDAI has issued a circular in which it has instructed insurance companies to upload the KYC information of their policyholders on its platform - Insurance Transaction Exchange (iTrex) developed by IRDAI by April 20.
So far, only 10 insurance companies have uploaded the status of KYC on iTrex. In the circular, IRDAI has said, “It may be appreciated that the iTrex will not only facilitate aggregating data across insurers but also help in identifying duplicates within the insurers as is evident in the ongoing exercise. It is imperative to complete this exercise and make it up-to-date at the earliest. Data relating to KYC related details of insurance policies up to 31st March, 2016 also needs to be captured at an early date. For policies issued subsequent to 31st March, 2016, it is proposed to make the upload possible by web service.”
Further, the insurance regulator has clarified that insurers who don’t comply to this circular cannot avail the benefits of iTrex.
Currently, separate KYC is needed for different insurance policies. For instance, separate KYCs are required to buy a term insurance plan and a health insurance plan. Many insurance advisors feel that the existing complications in KYC norms are, to some extent, proving to be deterrent for new investors to buy insurance policies. This is a cause of concern for the insurance industry.
To tackle this issue, IRDA had set up iTrex to facilitate data exchange between the repositories and insurance companies. A policyholder having an electronic Insurance Account (eIA) need not undergo multiple KYC. However, this facility has not been extended to physical policies yet. IRDAI is planning to leverage iTrex to introduce uniform KYC in physical policies too.
Earlier, T.S. Vijayan, IRDAI Chairman had said, “We are working on a project with Insurance Transaction Exchange (iTrex) to introduce uniform KYC in the insurance industry. This will help intermediaries in a big way.”