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KYC in Insurance: Between Compliance and Customer Experience

While banks are the first to be targeted by regulators in the fight against money laundering and the financing of terrorism (AML/CFT), they are not the only ones. Insurance companies are also exposed to major risks in the event of non-compliance with current regulations, and must therefore ensure that their Know Your Customer (KYC) processes are both robust and offer an optimal customer experience. Different products—and therefore different risks—what are the specificities of KYC in an insurance context?

Complex Regulations for Insurers to Implement

The insurance sector is one of the most heavily regulated internationally, with penalties being levied in the millions and tens of millions of dollars. Compliance with regulations has become a priority for the sector.

These regulations particularly impact life insurance players, who are exposed to the risk of money laundering due to the massive flows of funds entering and leaving their businesses, hence the importance of having seasoned KYC processes.

Non-life insurers are now also on the radar of the supervisory authorities. General insurers, brokers, and mutual insurers are currently undergoing numerous checks on their various activities, and it is highly likely that new sanctions will be imposed.

Automation and AI, a Necessity to Meet Today’s Challenges

Added to this regulatory context, often perceived as a headache by insurers (and their intermediaries), is the need to offer a fluid, seamless customer experience, despite already complex product underwriting.

Like the banks, the insurance industry has been undergoing a digital transformation for several years now, in response to changing customer needs. Mobile applications, chatbots, AI, remote identity verification using OCR (optical character recognition). These are just some of the digital and technological solutions we’ve put in place to simplify the customer journey and deliver a positive experience.

For example, since June, 2023, it has been possible to terminate an insurance contract electronically. Since this requires verification of the policyholder’s identity, we can already assume that automated remote verification of identity documents will be possible, implying the implementation of a KYC solution.

The Human Element: An Essential Complement to a Successful Customer Experience

Technology and automation can streamline KYC processes and improve the customer experience, provided they are properly implemented. This is why, over and above the obligation to comply, the deployment of KYC procedures in the insurance sector must be thought through and integrated into a customer experience approach, and perfectly integrated with the various distribution networks specific to the insurance sector (advisors, tied agents, brokers and other intermediaries).

Human intervention remains indispensable to manage more delicate situations, such as customer support, manual rework in the case of automatic document processing, the use of indicators to improve processes, etc.

In conclusion, the implementation of KYC processes is essential for the insurance industry, and represents an important lever for improving customer experience and operational efficiency. However, integrating customer relations at the very heart of the system requires expertise not only in KYC & insurance compliance, but also in customer experience, demanding large-scale technological and human resources. Turning to an expert in business process outsourcing is an effective solution that enables insurers to meet complex regulatory requirements, gain in efficiency and cost control, without sacrificing their internal resources, so they can concentrate 100% on their core business.

Learn more about our expertise in KYC and insurance compliance.

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KYC in Insurance: Between Compliance and Customer Experience