Editor | Telindus

 

THE FUTURE OF KYC FOR LIFE INSURERS

By Frank Roessig - Digital Finance Solutions Lead at Telindus

Life Insurers are targeted by Money Laundering & Fraud as a recent survey shows that roughly 2/3 of the insurance industry has been impacted. Indeed, criminals are using sophisticated tactics to succeed in this segment representing EUR 764BN in premiums in Europe.

Anti-Money Laundering / Terrorist Financing regulations are increasingly stringent, with many authorities, notably EIPOA, FATF, ESA as well as domestic bodies, publishing a wide array of texts in reference to KYC
activities. Regulators are requiring Life Insures to take a Risk Based Approach (RBA) in profiling clients and transactions. This entails a questionnaire through which person, product and distribution risks are score.

Further, PRIIPS requires a clear classification of a client’s investment profile. Life Insurers must therefore warrant compliance and at the same time enable a smooth client experience by building on a productive operation.

The particularity of Life Insurance resides with the distribution channels, the persons involved as well as product features.

Indeed, Life Insurance is still widely distributed through networks of intermediaries. KYC therefore implies enabling the intermediary engaged with the client tocollect relevant KYC information in a complete, efficient and usable manner.

Contractually, multiple parties are involved: The person paying the insurance, the insurance holder as well as the beneficiary or beneficiaries. Moreover, those may change over time.

Product wise, certain features, like single premium policies or annuity policies, refunding, possibility for excessive withdrawals/top-ups, transferability and policy loans can be a source of heightened risk.

While intermediaries, whether Bank-Insurance networks, agents or brokers, still represent the biggest distribution channel, digital distribution channels emerge like InsurTechs, online insurance marketing platforms and comparison sites. Accordingly, some intermediaries are boosting their online distribution. All this arises under the constraint of productivity and cost-consciousness.

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