New TransUnion Analysis Finds Using Court Record Violation Data Helps Predict Homeowners Policy Claims and Losses
A new TransUnion (NYSE: TRU) study showed a clear correlation between court record violation activity and homeowners insurance loss ratio performance. In fact, the non-weather loss ratio was approximately two times greater for those with the most severe court violations compared to a clean household.
Court record data, which includes criminal and traffic violations, is an alternative data source which provides additional behavioral insight into homeowners policies.
“The homeowners insurance industry is expanding its use of underwriting variables and rating techniques and is more closely evaluating those that are traditionally used in the personal automobile insurance underwriting process. The findings clearly show that the use of alternative data assets such as court record violations can help property insurance carriers better assess a homeowner’s risk. As insurance carriers incorporate driving records to properly price riskier policies, consumers with clean driving records can benefit.”
The study found that 25% of policies had at least one criminal or traffic violation based on the primary named insured. However, TransUnion’s householding technology identified and confirmed additional members of a household based on identifying information for one individual. As a result, additional household members were found for 60% of the policies analyzed, and the violation hit rate increased from 25% to 34%.
“The current macro-economic trends and the consumer market show there is a greater demand for using broader data attributes to deliver better predictive analytics,” said Geoff Hakel, senior vice president of TransUnion’s insurance business unit. “Incorporating court record violation data into the pricing and underwriting process provides property insurance carriers greater pricing sophistication and profitability.”
Homeowners insurance carriers can benefit in the following ways by incorporating court record violation data into their pricing and/or underwriting process:
- Improve risk segmentation to accurately price risks where violation behavior adversely impacts homeowners loss ratios.
- Right-price the one-third of your homeowners risks that have approximately a 29% higher loss ratio.
For more information about the study, please click here.
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