Back in January, the Reserve Bank of India permitted the use of video-based Know Your Customer (KYC) as an option to verify a customer’s identity for banking and non-banking financial entities regulated by the central bank. Now, the Insurance Regulatory Development Authority of India (IRDAI) has also opened the way for insurance companies to reap the benefits of the same.

The IRDAI send a letter to all the insurance firms stating they may start practising video-based identification in order to simplify the Know Your Customer (KYC) process for their customers.

The reform comes as a sigh of relief for the already struggling insurance sector as acquiring new customers and identification came to a halt because of the COVID-19 pandemic.

According to a top executive at an insurance company (cited as “anonymous” by Moneycontrol in their report), the body has released draft guidelines with the insurance companies, seeking their feedback on the same. Once feedback is processed, the body will release the final guidelines soon.

In the letter, the IRDAI further said, insurance firms may develop their app and carry out VBIP (Video Based Identification Process) with their customers after getting their consent. An authorised person of the insurance firm should do it and ensure live video recording and photo capturing are being done of the customer to obtain the identification information. The video must be clear and the customer shall be easily recognisable and not be covering his/her face in any manner.

It should also be ensured that the customer and the details provided by him/her during VBID matches with Aadhaar. Also, live location (geotagging) should be captured to ensure that customer is physically present in India. From the company’s side, the video call must originate from the insurance company’s domain only.

The prime objective of video-based KYC is to register the customer with the least amount of paperwork and in the shortest possible time possible, Santosh Agarwal, CBO-Life Insurance, commenting on IRDAI’s move.

The new video-based KYC process will prove very cost-effective and less time consuming for both the parties, the company and the customer, summarised from Mr Rudrajeet Desai’s take on the matter, founder, Workapps Product Solutions.