The Insurance Regulatory and Development Authority of India (IRDAI) has made it mandatory for all insurance policyholders to link their existing policies with Aadhar. The regulatory body announced that Aadhar linking is mandatory as per the prevention of money laundering rules and asked insurance companies to comply with the norms. However, IRDAI has not issued any particular deadline for linking Aadhar to insurance policies.
In a circular issued to all insurance companies, IRDAI said that the rule is statutory and all companies have to abide by it. As per this new rule, both life insurers and general insurers have to link the Aadhar number of their customers with their existing insurance policies.
On June 1, 2017, the government came up with a rule that Aadhar and PAN are mandatory to avail any kind of financial services including insurance. While this move is bound to increase transparency in the insurance sector, it will also prove to be a logistical challenge for insurance companies to implement them.
Earlier in September 2017, IRDAI said that Aadhar linking with insurance policies will be voluntary based on the consent of policyholders. With the new rule now making Aadhar linking mandatory, policyholders must soon communicate with their insurers regarding the status of their policies.
Since there is no deadline announced for this rule, it is assumed that existing policyholders have to provide their 12-digit Aadhar number to their insurer at the time of policy renewal. For new insurance policies, Aadhar number must be provided at the time of subscribing to a policy.
Following the announcement, many top executives at top private insurance firms commented that this move will prevent fraudulent claims in the long run. However, they also acknowledged that adding the Aadhar number of existing customers will be a challenging task.
The Reserve Bank of India has recently clarified that all bank account holders must link their Aadhar to their accounts. Also, new bank accounts can be opened only when Aadhar number is provided.