News Life and Health02 Nov 2018

India:Credit scores and lifestyle indicators increasingly used in underwriting

02 Nov 2018

Insurers in India are increasingly looking at customer data beyond medical test results, that would provide indications of the clients' lifestyle so as to make underwriting decisions more effectively.

“We use data, such as a customer’s credit score that is available from credit bureaus, with the customer’s consent and do the underwriting based on that,” Mr Vineet Arora, MD and CEO of Aegon Life Insurance told Daily News & Analysis. “You look at how much information you get from a medical test versus how much information you are able to get from the lifestyle of the customer. That’s the next level that insurance companies will have to reach very soon,’’ he said.

“A person who has a good credit score and his loan repayments are on time, everything else remaining the same, it is a fair assumption to make that the customer is a better customer. I (the insurer) still need to check the medical history,’’ Mr Arora said.

Mr Kayzad Hiramanek, COO, Bajaj Allianz Life Insurance, said that life insurance companies are extensively using data from credit bureaus as a financial surrogate. So, if the person has a good credit score, then the company does not ask for additional income documents.

Insurance companies are seeing a relationship between the claims behaviour and the credit score. "The better the credit score, the safer we find the customer is from an insurance perspective", said Mr Anurag Rastogi, member of executive management, HDFC Ergo General Insurance.

The claims process may be simplified for customers who have higher credit scores. While for those whose credit scores are low, the claims process may involve a higher level of due diligence.

While globally, insurance companies use scores as an input into their pricing models, Indian insurers are in the process of piloting such processes, said a spokesperson from Experian India.

In India, credit bureau information is used at the time of underwriting a policy. In addition, insurers are starting to use credit reports at the time of claims processing as well, said the spokesperson.

Meanwhile, TransUnion CIBIL, a leading credit information bureau, is lobbying the Reserve Bank of India and the Finance Ministry to allow telecom companies and insurers to report customer payment data to credit bureaux.


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