TransUnion Insurance Risk Index Declines for Third Consecutive Quarter, Positive Trend Noted
CHICAGO, IL--(Marketwire - May 3, 2010) - The most recent data from TransUnion finds that its proprietary Insurance Risk Index declined for the third consecutive quarter as of the end of the first quarter 2010. The Insurance Risk Index decreased another 14 basis points in the most recent quarter, falling from 99.32 in the fourth quarter of 2009 to the current 99.18 level. The last time the Insurance Risk Index decreased three consecutive quarters was prior to the current recession, between the first quarter of 2003 and the fourth quarter of 2003.
"This third quarterly decline in the Insurance Risk Index is a clear signal that consumer insurance risk associated with automobiles and housing, as reflected in the manner consumers responsibly manage and repay their credit obligations, will soon return to pre-recession levels," said Chet Wiermanski, TransUnion's global chief scientist.
Developed as a risk barometer specifically for the insurance industry, the Insurance Risk Index is designed to show the relative expected loss ratio for market segments throughout the country. The key ingredients in the Insurance Risk Index are TransUnion's insurance risk models, which are influenced by the length and stability of responsible credit performance. Benchmarked to the U.S. national average of 100 as of March 31, 2001, the Insurance Risk Index facilitates comparisons across geographies and demographic segments. For example, a state with an index of 110 is 10 percent riskier than a state with an index of 100.
"The continued decline in the Insurance Index confirms what we have been expecting for the past six months and is encouraging news for the industry and consumers," said TransUnion's Geoff Hakel, group vice president, Insurance business unit. "As risk levels continue to decrease, this trend should eventually be factored in the portfolios of insurance carriers, reflecting lower costs for consumers."
TransUnion's Insurance Risk Index -- Statistics
Year over year, the Insurance Risk Index is now 0.3 percent lower than it was as of the end of the first quarter in 2009 and is equivalent to the Insurance Risk Index observed at the end of the fourth quarter of 2008.
Montana continues to rank as the riskiest state with an index of 109.11. It is followed by Washington (105.16), Mississippi (102.76) and Arkansas (101.72). The states demonstrating the least risk from an insurance risk perspective are Alaska (94.64), Minnesota (95.19), Massachusetts (95.27) and Hawaii (95.64).
"With 49 states showing a decline in the Insurance Risk Index, the prospect of an economic recovery taking place throughout the country is very encouraging," said Wiermanski.
"The Insurance Risk Index, which today stands below 100, reflects higher insurance scores. As the economy continues to improve, especially within the employment sector, consumers should have more room in their wallets to repay their existing credit obligations.
"Over the last 18 months, consumers have made concerted efforts to pay their credit obligations on time and reduce their installment debt. These efforts are key factors towards higher insurance scores and a lower Insurance Risk Index. As the recovery continues to take hold and consumers accelerate their purchase of automobiles and homes, their increased debt burden, which reflects more insurance risk exposure, will lead to an eventual increase in the Insurance risk Index," continued Wiermanski
As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion employs associates in more than 25 countries on five continents. www.transunion.com/business
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