India: Life insurers tapping credit bureaux to know customers
Insurers have tightened checks following an amendment to the insurance law under which no insurance policy can be rejected on any ground, including fraud, after three years of the policy taking effect.
This means that life insurance companies will have to prove within three years from the commencement of an insurance policy that the policyholder had made an error, suppressed any related information or committed fraud.
Mr Rajeev Kumar, chief financial officer at Bharti AXA Life Insurance, said several insurers are now using the services of credit information companies to verify customers' details, including identity and address, reported Business Standard.
Ms Kalpana Pandey, Chief Executive Officer and Managing Director of the Mumbai-headquartered credit bureau, CRIF High Mark, said: "With the help of credit data, they (insurers) can do a quick background check which helps to reduce the turnaround time and leads to more customer satisfaction. Apart from this, the rationale is also to check the propensity of the customer to pay, which can end up improving the persistency ratio of the companies."
"Now that the Insurance Act mandates that no claim can be refused after three years, the risk assessment process has to be far tighter and needs to be at the acquisition stage itself with help from credit information companies," said Mr Girish Kulkarni, managing director and chief executive officer, Star Union Dai-ichi Life Insurance.
Separately, the Life Insurance Council, which represents life insurers in the country, is working to establish a centralized database of policyholders by December. The system is to help insurers detect any fraud in disclosure and claims