KYC Insurance: Know Your Health and Life Insurance Customers

All organizations in the financial industry sector are concerned about their operational security. Like the other players, insurance companies can face instances of illegal actions such as money laundering and terrorist financing. Customer identification through KYC procedures helps insurers know who their customers are, thereby preventing unlawful events.
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Why do Insurance Regulators Need to Know Your Customer?

The KYC techniques are obligatory for financial institutions to ensure legal and tax compliance and alleviate fraud risks. Furthermore, KYC secures customers, as it guarantees that the insurance coverage is paid to actual policyholders or their families.

KYC in insurance aims to address a range of challenges that the industry players may face.

Insurance services deal with significant disbursements, transfer of ownership, and diverse schemes that make them a tempting field for money laundering. Illicit funds laundering, fraudulent claims, fake maturity benefits, car insurance scams, and diverting of funds are some of the issues in this sector.

The most widespread types of fraud in health and life insurance include:
Fake illness

Fraudsters can establish assumed identities and make false claims under various fraudulent policies.

Identity theft

There are ways for criminals to obtain the documents of a specific person, take out life or health insurance in their name, and make fake claims for their illness or death.


Numerous types of fraud in insurance are connected with document falsification. This is another reason why regulators require that insurers verify their customers’ identities.

False insurance claim

It can be any type of fake claim, including the ones mentioned above, which is filed with a fraudulent intention.

Application fraud

Scammers open policies for unreal beneficiaries, open and cancel policies to get quotas and bonuses, or tweak application information to reduce their premiums.

The rise of financial crimes adversely affects the insurance industry. Every year, insurance fraud events cause American customers damage that equals $80 billion. Therefore, regulators force insurers to take measures to eliminate invalid claims.
Identity Verification Solutions for Insurance Firms

The first EU Directive established an anti-money laundering (AML) framework back in 1991. This laid the foundation for the systems regarded as customer due diligence (CDD) and know your customer (KYC). Today, KYC insurance and AML insurance adherence are compulsory for fintech organizations.

Insurance companies are responsible for verifying the identity of their clients. The checks can be accomplished by simply obtaining copies of their ID documents like passports or driving licenses and medical records. However, this poses a couple of challenges:

  • The documents do not confirm that an applicant is the same as the one on the ID;
  • The procedure extends the onboarding process.
Companies like KYCAID develop advanced solutions that provide a comprehensive verification and efficiently automate the necessary procedures, including:
Document check

This step is conducted to confirm the potential customer’s identity and age. The procedure empowers insurers to verify the authenticity and validity of provided documents. The process includes checking personal data, such as name, age, and address, and document features, such as fonts, stamps, and watermarks. Advanced automated solutions allow for performing the procedure online without requiring a client to be present.

Proof of address verification

The technique aims to confirm the customer’s real place of living. It usually asks an applicant to submit such documents as utility bills to validate the address.

Database screening

This is a vital step in a successful ID verification process, as it proves whether it is safe to work with an applicant. It checks a person across the available databases to ensure that a potential customer is not on sanctions, wanted lists, or PEP lists.

These and other verification steps help insurers guarantee security, comply with legal requirements, and streamline client experience.

Advanced solution!

The Future of Digital Insurance with KYCAID

As a part of the AML regulations system, KYC is deployed to guard insurance firms and other financial entities from money laundering and crime. This process generally comprises four different components:

  • Customer acceptance processes;
  • Customer identification policies;
  • Tracking transactions;
  • Risk management.

Organizations seeking to combat insurance fraud and enhance customer onboarding should set up efficient KYC for insurance claim techniques. Back in the day, the KYC method was time-consuming, error-prone, and lacked scalability.

The key to the insurers’ further success lies in a delightful onboarding experience for their clients, the ability to alleviate fraud, and the opportunity to grow. Contemporary identity verification techniques enable insurance companies to reach excellent results quickly and accurately. Advanced KYC software leverages a multi-layered approach to deliver superior security and protection.Complex and automated solutions ensure exceptional scalability while keeping the gate closed for bad actors.

The Future of Digital Insurance with KYCAID
Advantages of Partnering with KYCAID
KYCAID develops automated KYC solutions to take your verification procedures to the next level. With our software, insurance companies become empowered to:
Approve more legitimate applicants to elevate revenue
Verify identity and conduct an authentication process smoothly to identify account takeover or related fraud
Access cross-industry consortium fraud information
Take advantage of an on-demand configurable platform
Automated KYC solution for insurance business
Learn more with Kycaid's specialists

Since fraudsters develop new techniques every day, keeping pace with the breakthrough solutions to safeguard your company gains keen importance. On the other hand, insurance businesses need to grow and acquire new clients. In neither case should legal regulations and security measures restrict the flow of applicants.

KYCAID develops automated omnichannel solutions for ultimate verification, which can take a huge workload off insurers’ shoulders. Our software works quickly, accurately, and cost-efficiently. It reliably guards you against fraudulent activities, thereby limiting financial losses. Moreover, it ensures superb scalability, fostering the development of your business.

We successfully work in more than 247 countries and verify above 10,000 kinds of documents. The safety and reliability of our solutions are guaranteed by international certification. Call us to discuss your project, and we will craft a personalized software product right for your needs.

Learn more with Kycaid's specialists
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