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Insurance Risk Scores: Stability In a Turbulent Economy

March 2010
Personal property and casualty insurers have found consumer credit information to be a valuable predictor of insurance risk, relying on this information as a tool to more accurately price insurance risks.

In light of recent economic conditions, the personal property and casualty industry has questioned the continued efficacy of credit information as a risk-prediction tool. Did the performance of the insurance risk scores change? Did the scores need to be rebuilt? Were the insurance risk scores of consumers who continued to pay their bills negatively impacted by actions taken unilaterally by lenders?

To better understand how recent economic conditions and changes in lending practices have affected insurance scores, TransUnion performed an analysis of a sample of consumers using TransUnion credit-based insurance risk models and appended thousands of credit characteristics to the credit reports.

This analysis compares credit risk scores to insurance risk scores, provides details on the changes in average scores and addresses myths about insurance score drivers.