CHICAGO, IL--(Marketwire - September 9, 2010) - The most recent data from TransUnion finds that its proprietary Insurance Risk Index, which had declined during each of the three previous quarters, showed a slight increase as of the end of the second quarter 2010. The Insurance Risk Index increased 10 basis points during the second quarter of 2010, rising from 99.18 in the first quarter of 2010 to the current level of 99.28. On a year-over-year basis the Insurance Risk Index is 30 basis points or 0.3 percent less than its value at the end of the second quarter of 2009.
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 Insurance Risk Index has begun to level off well within the range established in late 2006 which saw strong economic conditions. Now that the Insurance Risk Index is firmly entrenched within this range, insurance providers should expect stable loss ratios over the next year. This is good for the industry as well as the consumer since insurance premiums are tied to expected loss ratios and the relative risk of customers in their respective portfolios," said Geoff Hakel, group vice president of TransUnion's insurance business unit
TransUnion's Insurance Risk Index - Statistics
With its 0.3 percent decline from the second quarter of 2009, the Insurance Risk Index is slightly less than it was during the second quarter of 2006. Montana continues to rank as the riskiest state with an index of 109.12. It is followed by Washington (104.96), Mississippi (102.76), Arkansas (101.71) and Texas (101.69). The states demonstrating the least risk from an insurance risk perspective continue to be Alaska (94.53), Minnesota (95.18), Massachusetts (95.61), and Vermont (96.12) surpassing Hawaii (96.26) to round out the top five least risky states.
The Insurance Risk Index, which today stands below 100, reflects higher insurance scores -- a key component of the Index. The higher the insurance score for a consumer, the less likely they will be to file a claim. As the economy continues to move forward at a slow, steady pace and additional improvements in the employment sector are more readily felt, consumers should have more room in their wallets to repay their existing credit obligations.
TransUnion has already reported positive signs in the areas with both auto and credit card delinquencies having dropped in the second quarter. Reducing installment debt and having good payment history are two key factors towards higher insurance scores and a lower Insurance Risk Index.
"As consumers begin purchasing large ticket durable goods such as automobiles and appliances, which are typically reflected in a consumer's credit report by the presence of new installment loans, we can expect to see the Insurance Risk Index drift slightly higher. This is due in a large part to higher replacement costs that insurance companies may need to compensate consumers when a claim is filed," said Chet Wiermanski, TransUnion's global chief scientist.
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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