IRDAI/I NTAII/BA/51/2018
CIN: U72900KA2018PTC110119
CIN: U72900KA2018PTC110119
The buzz around Aadhaar Card linkages is everywhere, from bank accounts to mobile connections. The insurance sector is no exception. According to the latest updates from the Insurance Regulatory and Development Authority of India (IRDAI), policyholders—both general and life insurance—must link their policies with their Aadhaar Card. The deadline for this linkage is December 31, 2017. IRDAI has instructed insurance companies to implement this rule immediately without waiting for further instructions. This initiative has been welcomed by insurers as it is expected to reduce fraudulent claims and increase the effectiveness of settlements.
The insurance industry is seeking alternatives, but for now, compliance with the new rules is mandatory. This requirement applies to all types of insurance policies, including term, health, travel, motor, and home insurance. There are 24 life insurance companies and 33 general insurance companies in India that must implement this rule.
As per the latest guidelines to insurance companies, policies will remain active if KYC documents are collected at the time of policy renewal. Health insurance policyholders need to be particularly vigilant. If a claim is filed while their Aadhaar card is not linked to their KYC documents, insurers will have no choice but to reject the claim, even if all other conditions are met.
In its announcement, IRDAI referenced a Central government notification from June 2017, which made Aadhaar and PAN KYC mandatory for availing any financial services, including insurance, under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017. The Reserve Bank of India (RBI) has also mandated the linking of Aadhaar cards to bank accounts under the same rules, emphasizing its constitutional force.
Linking Aadhaar cards with insurance policies will aid in claim settlement by verifying the applicant’s identity, reducing fraud, and speeding up the settlement process. Insurers view this move positively, anticipating that it will streamline the insurance KYC process. Despite initial challenges, this system is expected to benefit both insurers and policyholders in the long run by simplifying customer authentication and improving the overall claims process.
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