Insurance premiums to go up as IRDAI to make KYC mandatory for general insurance; CDSL biggest beneficiary, stock up over 5%

Insurance KYC rule: Those planning to buy a new insurance policy will now have to ensure that their KYC details are updated in order to be eligible for a new policy. As per sources, know your customer (KYC) details will be made mandatory to avail health and general insurance from November 1. Insurance policies will only be issued to policyholders upon completing the KYC details. Currently, KYC verification is voluntary.  

This will also lead to a slight rise in insurance premiums as now KYC charges will also be included in non-life insurance policies. The objective of the IRDAI is to control frauds and ensure full details are available with insurers.  

The development comes after non-life insurers have urged the Insurance Regulatory Development Authority of India (IRDAI) to make KYC mandatory for policyholders. They were of the view that it will help them get in contact with policyholder concerned in times of emergency and also help them with sales. 

Earlier in 2020, Insurance regulator IRDAI (Insurance Regulatory Development Authority of India) has allowed life as well general insurers to use the Video-Based Identification Process (VBIP) for prospective customers with a view to enhance the ease of doing KYC and help the insurance sector, which is battling the impact of COVID-19 pandemic. 

VBIP is a method of customer identification by a representative of the insurer by undertaking real-time, consent-based audio-visual interaction with the customer to obtain identification information, including the required documents, and to ascertain the veracity of the information furnished.  

The move is expected to help CDSL, one of the four IRDAI approved depositories and the he first listed Indian central securities depository. The entire process of KYC will be completed through CDSL.  

Speaking about CDSL stock, market expert Kunal Saraogi said the stock has formed a rounding bottom pattern. The stock has seen a breakout and can surge up to Rs 1800 upon daily closing of Rs 1300. Saraogi recommended a buy for new investors and suggested those who already have this stock to stay put in the counter.  

Meanwhile, Shares of CDSL rose over five per cent to Rs 1,253.35per share in NSE intraday trade on Tuesday