If you ever applied for a loan, you would know that your credit score would decide whether your loan will be approved or rejected, and if approved at what rate of interest.
Now, that same score—or something very similar—might soon decide how much you pay for insurance, or whether you get insured at all, according to recent media reports.
India’s general insurance industry is quietly working on a major change. They are building a credit-style scoring system allowing insurers to evaluate how trustworthy someone is before offering them a policy. And it’s not just about how you handle money—it’s about how you've behaved with insurance in the past.
Why This Shift Is Happening
The move is being led by the General Insurance Council, which represents insurance companies across India and reason is being cited as fraud, which is apparently draining them.
Every year, fake claims cost companies loss of thousands of crores in rupee. The worst is that these losses get passed on to genuine policyholders in the form of higher premiums.
At present, people who lie on claims or abuse their policies aren’t tracked in a meaningful way. They can hop from one insurer to another, defrauding multiple insurers over a span of time. But now, with this new scoring system, all of that could change.
What This Means for You
Let’s say you’ve never filed a fake claim. You pay your bills on time and you are a financially responsible individual. Under the new system, this history can work in your favour. You might get approved more easily for insurance and have to pay less in premiums.
On the flip side, if someone has a record of trying to outwit the system—filing inflated claims, delaying payments, or abandoning policies—they will likely see higher costs or face outright rejection.
In other words, your behaviour could decide whether the insurance considers it worthwhile to insure you.
This system will be applied to all sorts of insurance policies, life, health, vehicle and even home insurance or other sorts of insurance policies.
How It Will Work
The system will likely mirror what Cibil does for banks. Just like lenders check your credit score before offering you a loan, insurers will check your “insurance credit score” before deciding what kind of risk you are. But that’s not all. Your existing financial credit score might also be considered. If you have defaulted on loans or carry poor repayment habits, insurers might view you as someone who could also misuse an insurance policy. It’s not perfect, but it’s an extra data point, and insurers want it in the mix.
What Insurers Are Hoping For
This isn’t just about catching the bad apples. Insurers believe a system like this can make insurance fairer and more accessible. With fewer fraudulent claims in the system, companies won’t need to inflate premiums to protect themselves. That could mean better prices and simpler processes for people who play by the rules.
It also aligns with the government’s broader ambition of “Insurance for All by 2047.” To reach that goal, the industry needs tools that make insurance sustainable and scalable. A risk-profiling system could help make that happen.
What’s Next
At present, insurers are working on a framework. The General Insurance Council is leading the charge. It’s a statutory body set up under India’s Insurance Act, 1938 and works closely with the regulator, the Insurance Regulatory and Development Authority of India (Irdai).
There’s no exact launch date yet.
So, What Should You Do
If your financial habits are in order, there’s not much to worry about. In fact, you might benefit from lower premiums. However, in case you have a bad Cibil score or have abandoned policies in the past, you might have to sort things out before insurance companies consider you as uninsurable.
