“When looking at the Auto Insurance Risk Index on a state-by-state basis, it appears that the level of auto insurance risk is transitioning toward a period of higher risk,” said Chet Wiermanski, TransUnion’s global chief scientist. “While a 0.03 percent increase in the index at the national level may seem minor; two-thirds or thirty-four states experienced an increase over the previous quarter. This is considerable and suggests that a fundamental change in the level of auto insurance risk is beginning to take place.”
As a point of reference, in Q2 2011 every state, except Vermont experienced a decline in the index. On a year-over-year basis, 47 states and the District of Columbia experienced a decrease, with Oregon having the largest decline (-55 basis points), followed by New York (-54 basis points) and Montana (-50 basis points).
Developed as a risk barometer specifically for the auto insurance industry, the Auto Insurance Risk Index is designed to show the relative expected insurance loss ratio for market segments throughout the country. The key factors in the 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 Auto Insurance Risk Index helps to compare risk levels 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.
“Prior to this quarter, the decline in Auto Insurance Risk Index has been gradually decelerating, reflecting the rebound in the auto market as consumers began replacing an aging automobile fleet,” said Kelley Buchanan executive vice president in TransUnion’s insurance business unit. “Stable and relatively low-loss ratios insurance carriers have experienced over the past several years may be coming to an end as consumers trade for newer automobiles, which generally are more expensive to repair,” added Buchanan.
TransUnion’s Insurance Risk Index – Statistics
- Montana continues to rank as the riskiest state with an index of 108.46 followed by Washington (104.55), Mississippi (102.50), Arkansas (101.29) and Maryland (101.19). States demonstrating the least risk from an auto insurance perspective were Alaska (94.48), Minnesota (94.79), Massachusetts (95.60), North Dakota (95.62) and Hawaii (95.79).
“The number of new installment and auto loans reported to TransUnion are leading indicators of an increase in the Auto Insurance Risk Index,” said Wiermanski. “As the auto market continues to rebound we expect to see the index gradually increase into 2012 and beyond, but not to the historically high levels experienced immediately prior to the last recession.”
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