The Insurance Regulatory and Development Authority of India (IRDAI), in collaboration with the Income Tax Department, has mandated the compulsory usage of Permanent Account Number (PAN) for processing insurance claim settlements, especially those involving high-value payouts. This regulatory change is intended to enhance transparency, ensure tax compliance, and curb fraudulent claims in the insurance sector. The use of PAN will serve as a standard identifier for verifying the identity of policyholders and claimants.

Under the revised norms, insurers must now collect and validate the PAN of policyholders at the time of claim submission, particularly for settlements exceeding ₹1 lakh, or when aggregate claims in a financial year cross specified monetary limits. PAN will also be required for claims involving death benefits, maturity amounts, health reimbursements, and third-party settlements. Failure to furnish a valid PAN may result in delayed processing, higher TDS deduction as per Section 194DA of the Income Tax Act, or even rejection of the claim under certain circumstances.

Insurance companies have been directed to update their internal systems to integrate PAN verification through secure digital databases. Policyholders are advised to ensure their PAN is active, Aadhaar-linked, and correctly updated in their insurance records. This measure, effective immediately, is expected to promote accountability in claim disbursements, reduce misuse of insurance policies for money laundering, and align the industry with the government’s push toward a unified and verifiable financial identity system.