Knowing your digital customer with AIR

Compliance has always been a costly and difficult exercise for insurers, especially in an industry that is as strictly regulated as insurance. However, many governments around Asia have adopted a forward-thinking approach, promoting digitalisation within insurance organisations to ease the process of fulfilling compliance requirements. This is especially true when it comes to KYC and AML requirements, which increasingly have become avenues of risk for financial institutions around the world, as digital threats become more prevalent.
By Ahmad Zaki

ICICI Prudential Life chief risk and compliance officer Deepak Kinger told Asia Insurance Review that while the Indian anti money laundering laws read along with the regulations laid down by the Insurance Regulatory and Development Authority (IRDAI) have restricted the type of documents that may be accepted for KYC checks, they have also enabled insurance providers to focus on digitally enabling these processes and eliminating duplication to help the industry move towards increasing insurance penetration.

Reaching out to all customer segments in an efficient manner to enable businesses through digitalisation has helped make customer on-boarding completely seamless. This is encouraged by recent developments in India such as customer consent based availability of central repositories like the income tax PAN, Aadhaar ID and enabling sharing of KYC information across financial services.

As part of the development of digital infrastructure, the Indian government has set up multiple repositories and databases allowing many businesses, such as ICICI Prudential Life to move from physical to digital customer verification.

“A customer could also use his biometrics to verify his identity, without the biometrics getting stored by the insurer. Subsequently the customer account is run through a database of negative profiles to see if there is a match,” he said. “Assuming the customer is approved, payments are made and the proposal is closed.”

As the screening engine conducts several direct verifications of the customer’s identity, the risk profile for the insurer drops significantly, said Mr Kinger. “The screening process is also conducted for our existing customers on an ongoing basis”

During the present pandemic, where new channels like mobile apps and WhatsApp have become a sources of customer acquisition and servicing, the digital ecosystem enabled by the regulators has helped the industry meet the insurance needs of the customers.

Creating a seamless experience

Policy issuance at ICICI Prudential Life is seamless as its underwriting process is largely automated through various rule sets determined through a combination of reinsurance treaty-specific requirements, customer profile, product, premium and validation against industry pooled datasets at issuance.

The company has also introduced tele-medical underwriting under its digital initiative reducing the requirement for customers to undergo physical medicals. “Further, our engagement with Accuity enables us to identify possible negative profiles at the policy inception stage, giving us a complete view of our risk exposures. This helps us to sharp shoot and decongest the on-boarding and compliance process. The collaborative approach taken by Accuity in helping us setup these match rules has enhanced our ability to reduce risk and give our customers the best possible experience,” he said.

Keeping the data private

From a privacy perspective, IRDAI allows insurers to use customer information for limited purposes. “In insurance business, customer information is primarily used for underwriting, risk mitigation and servicing.”

While there was a big debate over whether to make use of the Aadhaar card mandatory in such transactions, the matter was ultimately struck down by India’s Supreme Court. Now, the customer is ultimately the decider over whether they share their Aadhaar card with financial institutions.

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