IRDA makes linking insurance policy mandatory with Aadhaar

If you hold an insurance policy, get ready to link it with Aadhaar. After Reserve Bank of India made it clear that linking bank accounts with Aadhaar is mandatory under Prevention of Money-laundering Second Amendment Rules, 2017, Insurance Regulatory and Development Authority of India (IRDAI) too made a similar announcement regarding linking existing policies with Aadhaar as well as quoting it for buying a new policy. The announcement stands applicable for both life and general insurance policies. The latter includes insurance policies like health, motor, travel and home.

In the announcement, the IRDA referred to Central government's gazette notification dated Ist June, 2017, wherein it notified the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017 and made Aadhaar and PAN/Form 60 mandatory for availing financial services including insurance and also for linking the existing policies with the same.

The circular issued on Wednesday said, "The Authority clarifies that, linkage of Aadhaar number to Insurance Policies is mandatory under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017,"

The regulator further said that life and general insurers including standalone health insurers have to implement the linking of Aadhaar number issued by the Unique Identification Authority of India with insurance policies without awaiting further instructions.

The move was welcomed by the insurers, some of them opined that linkage of Aadhaar with an insurance policy will greatly help reduce fraudulent claims and increase the speed of settlement.

In October, the Reserve Bank of India had clarified a reply made by it in response to a RTI query regarding Aadhaar linking with bank accounts. In a press release it said, "The Reserve Bank clarifies that, in applicable cases, linkage of Aadhaar number to bank account is mandatory under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017 published in the Official Gazette on June 1, 2017.These Rules have statutory force and, as such, banks have to implement them without awaiting further instructions.