U.S. Consumers Continue to Switch Auto Insurance at Higher Rates, Leading Carriers to Continue Focus on Renewal and Retention

05/16/2024

ATLANTA

• U.S. consumer auto insurance shopping activity registered as “Hot” on the LexisNexis® Insurance Demand Meter, as quarterly year-over-year shopping grew 2.9% for Q1 2024 (slowing slightly from last quarter’s 4.7% increase year-over-year).
• The quarterly year-over-year growth for new policies was “Sizzling,” up 8.7% for Q1 2024 (and up again from +7.0% last quarter).
• Quarterly year-over-year new policy growth increased, trending up for the seventh consecutive quarter and 20th straight month, meaning consumers continue to switch carriers at an increasing rate when they shop.
  
• Even as March saw a slightly lower shopping growth rate from the previous year – which may be attributable to fewer workdays and more weekends than in 2023 – 42% of insured households shopped in the last 12 months. 
  
• When comparing all years back to 2021, the consumers most likely to be retained by their existing insurance company – or those who have been loyal for 10+ consecutive years – comprised less than 20% of the shopper pool. Through Q1 2024, this cohort has grown to 24% of total shoppers.
• More drivers entering the market: In Q1 2024, the growth in new drivers largely offset the number of leavers. This bucks the trends observed in 2022 and 2023 where a record number of consumers left the market in response to higher premiums. 

• In Q1 2024, older shoppers (66-year-old and over) looked for insurance at the highest clip, with higher premiums helping incentivize those on fixed incomes to shop.
• Tax season delivered a shopping boost as more uninsured consumers re-entered the market despite purchase rates remaining lower than historical averages for the uninsured population.
• Despite healthy shopping patterns for Q1 overall, March was the outlier with shopping growth falling slightly negative.

“As we have seen more shopping in recent months from consumers who have traditionally been longer-tenured and more loyal, insurers with an appetite for growth may still have an opportunity to capitalize as these consumers seek to lower their premiums,” said Adam Pichon, senior vice president, global analytics, LexisNexis® Risk Solutions. “Insurers may also want to consider implementing stronger retention strategies as they seek to return to rate adequacy and profitability, including more proactive and selective monitoring of their renewal books to help identity and retain those loyal policyholders.” 

Though shopping has remained high through the first three months of 2024, it has not outpaced shopping growth from Q4 2023. With that in mind, Q2 2024 could serve as a litmus test as to whether the market could see a slowdown in shopping like last year or if there will be a shift in traditional consumer shopping behavior.

“Fewer large rate increases are being implemented by many insurers, but will traditionally loyal consumers now continue to shop, having realized there may be opportunities to save in the future? If so, this could present yet another shift in the shopping paradigm insurers must consider,” said Pichon. “Those insurers with a measured approach to acquiring the right new business and retaining their most profitable business stand poised to gain market share as the industry overall continues to climb back to profitability.”

Download the latest Insurance Demand Meter.

LexisNexis Insurance Demand Meter
The LexisNexis® Insurance Demand Meter is a quarterly analysis of shopping volume and frequency, new business volume and related data points. LexisNexis Risk Solutions offers this unique market-wide perspective of consumer shopping and switching behavior based on its analysis of billions of consumer shopping transactions since 2009, representing nearly 90% of the universe of insurance shopping activity.

About LexisNexis Risk Solutions
LexisNexis® Risk Solutions provides customers with information-based analytics and decision tools that combine public and industry-specific content with advanced technology and algorithms to assist them in evaluating and predicting risk and enhancing operational efficiency. Headquartered in metro Atlanta, Georgia, the company has offices throughout the world, serves customers in more than 190 countries and territories and is part of RELX. For more information, please visit LexisNexis Risk Solutions and RELX.