Insurance Regulatory and Development Authority (Irdai) said that linkage of Aadhaar number to insurance policies is essential under the Prevention of Money Laundering (Maintenance of Records) Second Amendment Rules, 2017.
Irdai has issued a circular according to which all the insurance companies have to bring into a force without awaiting further instructions.
In India, there are presently 24 life insurance companies and 33 general insures (including standalone health insurance firms). Many insurers take PAN for all life policies although the regulator requires them for cash premium above Rs 50,000.
In a bid to connect Aadhaar with financial services, the government had notified the Prevention of Money Laundering (Maintenance of Records) Second Amendment Rules, 2017, making Aaadhar and PAN/Form 60 mandatory for getting insurance and also for linking the existing policies with the same in June.
Ashish Kumar Srivastava, MD & CEO of the PNB MetLife has welcomed this move and said that “If the insured is involved in any untoward incident, the family can now get easy access to his financial information. This will go a long way to ease their burden. This linkage will also bring greater transparency and efficiency to the insurance process, thus aligning with the overall digitalization agenda".
Linking Aadhaar with insurance and financial policies will help during claims and settlement for establishing the identity of the claimant. It will also minimize fraudulent claims and surge the speed of settlement.
“This new mandate will further help in streamlining KYC processes for customers and shall prevent fraudulent claims. It will further make the claim process faster and ensure better customer experience.
There may be some inconvenience in the beginning but it a win-win in the long term,” he says. Similarly, Sandeep Patel, MD and CEO of Cigna TTK Health Insurance says based on the unique identity, it will now be simple and easy to authenticate customers.
“It will bring in efficiency to our processes while onboarding a customer to settling claims and therefore offer a better customer experience,” he says.
In reality, the linking of Aadhaar with insurance is undoubtedly beneficial to insures but it will be a logistical challenge for them. According to Suresh Agarwal, chief distribution officer, Kotak Life Insurance in starting there will be a small challenge but in long-term it will be positive for the industry and customers.