Know Your Customer (KYC) forms a key component of anti-money laundering (AML) and counter-terrorist financing (CTF) controls across the insurance sector. While insurance products are not account based in the same way as banking, regulators across jurisdictions expect insurers to understand who they are doing business with, how funds move through policies, and where financial crime risk may arise across the policy lifecycle.
This KYC 101 outlines why KYC and AML checks for insurance matter, how requirements typically apply in practice, and some of the considerations shaping insurance compliance today.
KYC in insurance sits within a broader customer due diligence (CDD) framework. It typically covers customer identification and verification, an assessment of financial crime risk, and forms of ongoing review throughout the life of a policy. These controls support insurers in meeting AML, counter-terrorist financing, and sanctions obligations derived from international standard setting bodies, such as the Financial Action Task Force (FATF), and implemented through local AML, CTF, and sanctions regimes overseen by insurance supervisors and financial regulators.
Unlike banks, insurers often interact with customers at defined points such as at onboarding, renewal, mid‑term adjustment, or during a claim, rather than through continuous transaction activity. This means KYC and AML checks for insurance may need to be aligned to longer product lifecycles and less frequent customer touchpoints.
Insurance products can vary widely in structure and risk exposure. Life insurance and investment‑linked products may involve surrender values, premium financing, and complex beneficiary arrangements, which can increase exposure to misuse for money laundering. Non‑life insurance may present lower inherent risk in many cases, but high‑value policies, refunds, or trade‑related risks (such as marine or energy insurance) may still warrant closer attention.
Distribution models add another layer of complexity. Intermediated business involving brokers, cover holders, or managing general agents can limit direct visibility into the identity of the end customer. Cross‑border operations introduce additional considerations, as insurers may need to align internal standards across multiple AML regimes.
Taken together, these factors mean that KYC and AML checks for insurance often require tailored approaches rather than reliance on uniform processes.
At a practical level, KYC for insurance generally begins with identifying and verifying the policyholder. Depending on the product, this may also include understanding beneficial ownership, control structures, premium payers, and beneficiaries. For commercial and specialty lines, this can extend to group structures and the nature of underlying business activities.
Information collected through KYC processes is used to build an understanding of financial crime risk exposure, supporting decisions about the level of monitoring or review that may be appropriate over time. Many regulatory frameworks emphasize a risk‑based approach, under which higher‑risk customers or products may be subject to enhanced scrutiny.
Importantly, KYC in insurance is not limited to onboarding. Relevant changes such as ownership updates, policy alterations, or certain claims activity may prompt further review as part of ongoing due diligence.
Supervisory attention on AML controls in the insurance sector has increased as part of a broader focus on non-bank financial institutions. Regulators continue to emphasize consistency, documentation, and the application of risk-based methodologies, for example through guidance from the UK’s Financial Conduct Authority, developments in EU AML reforms supported by the establishment of the anti-money laundering authority (AMLA), and FinCEN’s risk based program expectations.
At the same time, certain sanctions regimes (including those in the US, EU, and UK) are placing emphasis on ownership and control, particularly for policies connected to complex supply chains or international trade. For insurers operating across jurisdictions, this may translate into a need to reconcile local regulatory requirements with group‑wide policies and oversight.
In this environment, KYC and AML checks are increasingly viewed not as isolated compliance tasks, but as part of broader anti-financial crime risk management across underwriting, onboarding, and claims.
In response to evolving regulatory expectations, many insurers are reviewing how customer data is collected, maintained, and used across an organization. Fragmented information held across policy administration systems, claims platforms, and customer relationship management (CRM) tools can make it more difficult to develop a consistent view of customer risk.
Insurers may also be assessing how manual processes affect operational resilience and auditability. From a governance perspective, KYC frameworks typically need to demonstrate that decisions are applied consistently and proportionately, with appropriate oversight across different lines of business and distribution channels.
While KYC plays an important role in meeting AML and sanctions obligations, the process can also support broader business objectives. For example, clearer visibility of customer relationships can also assist insurers in identifying unusual patterns, reducing exposure to fraud, and managing reputational risk. Over time, a well‑structured approach to KYC can support greater confidence in underwriting decisions and regulatory engagement.
Moody’s data, analytics, and workflow solutions support insurers’ KYC and CDD activities, bringing together entity data, ownership and control insight, sanctions intelligence, screening capabilities, and other related workflow tools.
Applied across onboarding, underwriting, and claims, these capabilities can help insurers develop a more connected view of customer‑related risk, supporting more consistent application of KYC frameworks across the policy lifecycle.
For more information about Moody’s KYC solutions for insurers, please get in touch with the team at any time. We would love to hear from you.
*Disclaimer: This content is for informational purposes only and does not constitute legal, financial, compliance or other professional advice. Please consult with a qualified professional for specific legal, financial, compliance, or other professional advice. For more terms and conditions pertaining to Moody’s products and services, refer to the disclaimer on Moody’s website.