CIBIL ready to offer expertise to insurance companies

Credit Information Bureau (India) Limited (CIBIL) is keen to offer its expertise in minimising risks to insurance companies. Banks and other lenders in the organised sector have already been tapping its expertise in this space. “We are looking at insurance [companies]… both general and life,” CIBIL Chairman M. V. Nair said.

The data related to prospective customers would help insurance firms in their premium pricing decisions, he told presspersons on the sidelines of the third annual credit information conference organised here on Wednesday by the bureau. Mr. Nair, however, said the details of proposal were yet to be worked.

Discussions with the insurance companies were in initial stages, he said. CIBIL would also approach the Insurance Regulatory and Development Authority in this regard, he added. The insurance regulator had decided to have a separate (credit) bureau for insurance. “That’s in the offing… trying to talk to them that our expertise can be utilised,” he said.

CIBIL, according to Mr. Nair, has 840 members, “which means all banks, NBFCs, co-operative banks and any lender in the system are our members… that’s almost 97-98 per cent of the data is with us.” It had records pertaining to 200 million consumers, and 10 million companies.

On the significance of credit scores for lenders, he said delinquencies in credit cards, based on 90 days plus outstanding dues not paid, were 7 per cent in 2009. It was around this time that the credit bureau of information started getting perfected, he said.

Such delinquencies now were down to 1.5 per cent, he said.

The scores that so far helped access to bank credit would influence the price in future. “Banks have started choosing the borrowers with a better track record, and the natural sequence would be that those having a better score would bargain for a better price. We will see happening in 1-2 years,” he said.

Data quality

Addressing the conference, Reserve Bank of India Regional Director for Tamil Nadu and Puducherry N. S. Vishwanathan said sharing of credit information by banks and other players was a sign of evolution of the industry.

Data quality, he said, was another issue that needed to be addressed.

“No two statements of credit information are the same,” he said. However, in terms of coverage and depth it had improved, he added.

With individual credit growth set to increase, driven by greater demand creation from the middle-class, enhancing the quality of data was important to prevent frauds. Empirical evidence showed that the quality of assets was better in every country that had a robust credit information system, he pointed out.

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