Question

Why is it important for insurance companies to verify the identity of their customers thoroughly?

a.

To prevent misuse of financial services by criminals

b.

To increase paperwork

c.

To discourage genuine customers

d.

To violate privacy rights

Posted under IC 14 Regulations of Insurance Business

Answer: (a).To prevent misuse of financial services by criminals Explanation:Insurance companies need to verify the identity of their customers thoroughly to prevent misuse of financial services by criminals. Criminals often attempt to maintain anonymity and use financial services with dubious identities for illegal activities like money laundering. By adhering to strict KYC procedures and verifying customer identities, insurance companies can mitigate the risk of being exploited for unlawful purposes.

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Q. Why is it important for insurance companies to verify the identity of their customers thoroughly?
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