After four straight quarter-over-quarter declines, auto insurance risk in the U.S. rose at the end of the third quarter (Q3) 2011, TransUnion said in a recent report.
TransUnion, a global leader in credit and information management, maintains a quarterly Auto Insurance Risk Index that serves as risk barometer for auto insurance companies to gauge insurance loss expectations. According to the report, the risk model that TransUnion uses is in part influenced by credit performance and stability.
“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,” Chet Wiermanski, TransUnion’s global chief scientist, said in a statement.
In Q3 2011, the Index rose slightly (three basis points) to a level of 98.85.
“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,” Wiermanski said. “This is considerable and suggests that a fundamental change in the level of auto insurance risk is beginning to take place.”
According to TransUnion, Montana ranked as the riskiest state (from an auto insurance angle) at the end Q3 2011, followed by Washington and Mississippi. On the flip side, Alaska came in as the least riskiest state, followed by Minnesota and Massachusetts.
“The number of new installment and auto loans reported to TransUnion are leading indicators of an increase in the Auto Insurance Risk Index,” Wiermanski said. “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.”