How Video Identification is Revolutionizing the Insurance Industry during the Pandemic
The Insurance Regulatory Development Authority of India (IRDAI) has authorised insurance companies to verify and onboard customers through video verification. Due to the Pandemic, the physical procedures of insurance policy issuance have been greatly affected because of social distancing. The reason why insurance companies are completing their mandatory KYC processes through online video verification without having clients to step out of their comfort zones.
Defining Video Verification
Digital KYC or Know Your Customer processes are performed during the early stages of on-boarding for customer identification and risk assessment in compliance with anti-money laundering regulations to prevent possible frauds. This familiarises insurance companies with their customer identities and associated risks through extensive document verification and risk profiling.
Video KYC solution, on the other hand, is an advanced step towards remote customer on-boarding and verification. Through which Insurance companies can eliminate their paper-based approach since VideoID is carried out remotely through a quick interview.
Video KYC Process
Video KYC is a paperless and cost-effective digital process of identification that is carried out by a KYC expert, who is trained and authorised by the insurer for conducting face-to-face interviews with customers. The purpose is to gather identification information through identity documents for customer due diligence.
The customer undergoing video KYC, on the other hand, is required to show their face to the camera along with their legal ID documents. Since video KYC is a digital solution, it uses the applications of Artificial Intelligence, biometrics, and liveness detection to ensure the remote physical presence of individuals to prevent facial spoof attacks, pre-recorded videos, or still images.
Challenges of traditional insurance KYC
• The manual process is prone to errors, misuse, and leakage of information
• Bound to geographical limitations
• Higher costs for processing information
• Higher turnaround time can make customers restless which impacts the entire customer experience
• Customer on-boarding through the traditional KYC process is tiresome and lengthy
• Repeated physical visits can lead to high KYC drop off rates
Benefits of deploying video KYC Solution
The video KYC solution not only expedites the process of buying insurance policies online but makes it more secure and risk-free as issuance depends on the authenticity of potential policyholders. Using videoID, insurance agents, and clients both do not have to physically visit the place to inquire about the information, for paperwork and verification during the global pandemic which demands everyone to stay in enclosed spaces.
They can get insurance simply through their consent by means of video KYC solution without compromising personal safety. Moreover, manually on-boarding new clients can take up to three months which makes the whole process inefficient and inefficiencies in the system can make the client leave. Whereas video verification decreases drop-off rates on on-boarding which makes the remote on-boarding process increasingly effective.
This paperless and contactless process also reduces KYC costs. Financial institutions have reported that they are spending an estimated $500 million annually on KYC , thus reducing costs by deploying video KYC for insurance firms is paramount if they are looking to thrive.