What is CKYC – The Insurance Regulatory and Development Authority of India (IRDAI) has issued new guidelines, stating that insurance agents can no longer collect physical KYC documents from customers for any policy transactions starting October 1, 2024. Instead, agents must now rely on a centralised process called Central Know Your Customer (CKYC). This mandatory change aims to simplify and streamline the KYC process across the insurance industry. CKYC allows customers to submit their KYC details once, storing them in a centralised database that can be accessed by financial institutions. This article will explore the CKYC process, how it works, and how insurance agents can implement it efficiently.
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What is CKYC Number?
Central Know Your Customer (CKYC) is a centralised KYC process that allows customers to submit their KYC details once, after which these details are stored in a centralized repository. CKYC is a unique 14-digit number assigned to customers that financial institutions, including insurance companies, can use to verify the identity of a policyholder without requiring physical documents like Aadhaar, PAN, or other proof.
The CKYC initiative was introduced by the Government of India and is regulated by the Central KYC Records Registry (CKYCR). It aims to simplify the KYC process across financial sectors by reducing redundancy and making customer verification more efficient. Once registered, customers no longer need to submit physical documents for each financial service they opt for; instead, they only need to provide their CKYC number.
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Why CKYC is Becoming Compulsory for Insurance Agents?
The IRDAI has mandated CKYC as part of a broader initiative to streamline customer verification in the insurance industry. The change is set to take effect from October 1, 2024, and will have a profound impact on the way insurance agents interact with customers. With CKYC, agents will no longer be responsible for collecting physical documents like Aadhaar and PAN cards, which can often be cumbersome for both parties.
This shift is designed to improve data security and reduce the chances of fraud or misuse of personal documents. Furthermore, it speeds up the policy issuance process since insurers can quickly verify customer identity using the CKYC number without waiting for the submission and verification of physical documents.
Also see: IRDAI New Guidelines for LIC
Difference Between CKYC and eKYC
It’s important to understand the difference between CKYC and eKYC:
- CKYC: This is a centralized KYC system that applies to multiple financial institutions, including insurance companies. Once a customer’s KYC details are uploaded and a CKYC number is assigned, these details are available to any institution the customer interacts with.
- eKYC: This is an electronic version of KYC where verification is done through the customer’s Aadhaar card and biometric data. eKYC is generally used for individual institutions and is not shared across financial sectors.
Step-by-Step Process to Generate CKYC Number
Generating a CKYC number is a simple and straightforward process that any insurance agent can guide their customers through. Here’s a step-by-step guide on how to do it:
- Visit the CKYC Website: The process begins by visiting the CKYC India website (https://www.ckycindia.in). This platform allows customers to register their CKYC, check the status, and view their CKYC card.
- Register on the Website: After accessing the CKYC website, look for the option to Register for CKYC. You will also see options to Login or view your CKYC card.
- Provide Mobile Number and Captcha: Enter the customer’s mobile number and complete the captcha for verification. This ensures that the process is secure.
- Receive OTP: Once the mobile number is entered, an OTP (One Time Password) will be sent to the registered mobile number. The OTP is valid for two minutes, so ensure it is entered promptly.
- Submit OTP: After entering the OTP, submit the request. Upon submission, you will receive an SMS from the Government of India containing the CKYC number.
- View and Download CKYC Card: The CKYC card, which contains the 14-digit CKYC number, will be available for viewing and download. This card can be shared with financial institutions when required.
- Provide CKYC Number to Insurance Companies: Once the customer’s CKYC is generated, they can simply provide this number to insurance companies during the policy issuance process, eliminating the need for physical documents.
Benefits of CKYC for Insurance Agents
CKYC brings several advantages for both insurance agents and customers:
- Simplicity: Once a customer is registered for CKYC, the entire KYC process becomes hassle-free for future financial transactions. Agents no longer need to collect and verify physical documents repeatedly for each policy.
- Increased Trust and Customer Satisfaction: Insurance agents who offer CKYC registration as a free service to their customers can build better relationships. Customers will appreciate the agent’s help in simplifying the KYC process, potentially leading to more policy sales and stronger client-agent bonds.
- Faster Policy Issuance: Since customer identity verification is done through the centralized CKYC system, policies can be issued more quickly. The insurer can pull customer details from the CKYC repository instead of waiting for document submission and manual verification.
- Improved Data Security: With CKYC, personal documents like Aadhaar and PAN cards are stored securely in a centralized system, reducing the risk of data theft or fraud. Agents can assure customers that their sensitive data is protected.
- Compliant with Regulations: CKYC is now a regulatory requirement by IRDAI. By implementing CKYC, agents are ensuring that their practices are compliant with the latest industry regulations, avoiding potential legal issues.
How Insurance Agents Can Leverage CKYC for Business Growth
With CKYC becoming mandatory, insurance agents can leverage this system as a value-added service for their customers. Here’s how:
Offer CKYC Registration as a Free Service
Not every customer will know how to register for CKYC, and this is where agents can step in. By offering free CKYC registration, agents can provide a valuable service to their prospects. This goodwill gesture can help agents build rapport with potential customers, increasing the likelihood of a successful policy sale.
Educate Customers About the Benefits of CKYC
Most customers may not be aware of CKYC and its benefits. Agents can take the opportunity to educate their clients about the system, its security advantages, and the time it saves. By positioning themselves as knowledgeable advisors, agents can boost their credibility.
Smooth Onboarding Experience
With CKYC, the onboarding experience for customers is streamlined. The process of issuing a policy becomes faster and easier, enhancing customer satisfaction. Agents who provide an effortless experience are likely to receive referrals and positive feedback, growing their customer base.
Target New Customers
Since CKYC applies across the financial sector, agents can target customers who already have a CKYC number from other financial institutions like banks or mutual fund companies. Offering them insurance services becomes simpler as they are already CKYC-compliant.
Challenges of CKYC Implementation
CKYC simplifies the KYC process, there may still be challenges that agents and customers might face:
- Delayed SMS for CKYC Number: As noted in the article, there can be delays in receiving the CKYC number via SMS. While the system is generally reliable, agents and customers should be prepared for occasional delays.
- Technical Glitches: Like any digital system, the CKYC platform may experience technical issues that could hinder smooth registration. Agents should be equipped to handle such situations and guide their customers accordingly.
- Customer Awareness: Not all customers will be familiar with CKYC, and it may take time to educate them about the new system. Agents will need to invest time in explaining the benefits and addressing concerns.
Conclusion
As the insurance industry transitions to CKYC from October 1, 2024, insurance agents need to adapt to these changes quickly. CKYC offers a streamlined, secure, and efficient way to complete the KYC process, eliminating the need for physical documents. By guiding customers through CKYC registration, agents can enhance customer satisfaction, build stronger relationships, and ultimately boost their business. The introduction of CKYC is not just a regulatory change but a powerful tool for agents to grow their clientele and stay ahead in the competitive insurance industry.
FAQs about CKYC Number.
What is CKYC, and why is it important for insurance agents?
CKYC (Central Know Your Customer) is a centralized system for storing KYC details. It eliminates the need for agents to collect physical documents like Aadhaar or PAN cards from customers. After October 1, 2024, CKYC will become mandatory for all insurance policies, streamlining customer verification.
How can an insurance agent generate a CKYC number for a customer?
To generate a CKYC number, visit the CKYC website (ckycindia.in), enter the customer’s mobile number, complete the captcha, and submit the OTP sent to the mobile number. The customer will receive their CKYC number via SMS.
What is the difference between CKYC and eKYC?
CKYC is a centralized system where KYC details are stored and shared with multiple financial institutions. eKYC, on the other hand, is electronic verification of KYC through Aadhaar, used for individual institutions and not shared across financial sectors.
Can customers still use Aadhaar or PAN for KYC after CKYC is mandatory?
After CKYC becomes mandatory, customers will not need to submit Aadhaar or PAN for KYC. Instead, they can provide their 14-digit CKYC number, which contains all necessary identity verification details.
How can CKYC help insurance agents build better customer relationships?
By offering CKYC registration as a free service, agents can provide added value to customers, making the KYC process easier and faster. This can help agents build trust and increase the likelihood of securing new policies.
Disclaimer: This article provides an overview of the CKYC process as mandated by IRDAI for insurance agents. The information is for educational purposes only and is based on current regulations as of October 2024. Readers are encouraged to verify details with official sources before making any decisions related to CKYC or other financial processes.