CTOS To Compliment Insurance

CTOS Data Systems Sdn Bhd (CTOS) is poised to incorporate its CTOS Score - individual credits rating - for the convenience of banks and insurance companies in Malaysia.

The credit rating agency said financial and insurance companies will have the advantage of designing their products and services to cater to the needs of consumers and price them differently to offer more and better choices, while increasing profitability based on an individual’s risk profile.

CTOS Holdings group chief executive officer Dennis Martin said, as part of Bank Negara Malaysia's (BNM) initiatives to liberalise pricing insurance products, consumers will start seeing more flexibility in insurance product pricing.

"At CTOS, we believe there is a big opportunity to better segment customers based on their credit information and credit score. CTOS Score delivers the same characteristics and similar weights as a purpose-built Insurance Score," he said during the CTOS conference in Kuala Lumpur, today.

Martin added the CTOS Score is a three-digit number that represents the creditworthiness of an individual can serve as a credible tool when it comes to determining insurance premium prices based on the perceived risk of consumers.

Having recently launched its CTOS Score in November last year, CTOS said it recorded over one million CTOS Scores have already been generated and used to make better credit decisions.

"This has been strongly adopted amongst leading Malaysian banks as well as other financial institutions," he said.

From July 1, 2017 onwards, the set tariff rates for comprehensive and third-party motor insurance will be gradually withdrawn and premium rates will no longer be regulated as strictly.

Instead, the premiums will be determined by the market and risk profiles and it will be charged based on the assessment of individual risk.

CTOS said the introduction of risk-based pricing, which has been widely used across the globe, utilises statistical techniques to translate information about the insured person and determine their risk profile.

For lower risk clients, insurance companies would then have the opportunity to offer better premiums.

While information about the age and health of the insured person is used for life insurance products, motor insurance tends to use more information.