The LexisNexis U.S. Insurance Demand Meter offers a comprehensive snapshot of key developments, including consumer auto insurance shopping and switching behaviors, as well as drivers of this activity, which help shape the U.S. auto insurance market.
The latest report reveals that shopping and new policy volumes continued to soar throughout 2024, with shopping levels registered as “Nuclear” for the third consecutive quarter.
In the fourth quarter of 2024, auto insurance shopping experienced a 26% year-over-year increase, and while this growth is not as high as the 31.2% growth in Q3, it still outpaced 2023 shopping activity.
The new policy business remained elevated at 17.7%, moving to a “Sizzling” designation on the U.S. Demand Meter. While registering notable activity, it did cool from its previous “Nuclear” reading in Q3 (25.9%).
Activity levels reflected that price-sensitive consumers were motivated to shop in response to rising rates, and insurance carriers ramped up marketing efforts to entice those shoppers to switch.
As of December 31, 45% of policies-in-force were shopped at least once in the previous 12 months. This persistent interest in comparing rates indicated a highly active market where consumers consistently sought more favorable deals. Let’s look closer at some key insights.
The year in review: Auto insurance shopping in 2024
While shopping growth ended the year outpacing new policy growth, that wasn’t the case in Q1 and Q2. In the first half of 2024, the number of consumers switching carriers exceeded shopping activity. With varied timing for each state’s rate increases leaving attractive premiums offered by insurers, shoppers were quickly able to find savings.
By Q3, shopping growth surpassed new business volumes and sustained that trajectory through the end of 2024. Despite the slightly less pronounced activity in Q4, insurers still saw record switching volumes each month.
New York and Hawaii lagged behind other states
Across the country, insurers observed pre-hard market volumes in Q4 shopping and new business in all but two states, New York and Hawaii.
Although new policy growth began to stabilize across the industry in 2023, New York moved in the opposite direction, declining further into negative shopping territory, even though it had taken similar cumulative rate increases as the industry since 2022.
New York saw the opposite effect, likely driven by insurers continuing to impose underwriting restrictions and/or scaling back marketing efforts in the state.
The fourth quarter holiday slowdown
As in previous years, the fourth quarter of 2024 saw a slight dip in shopping activity. This drop in auto insurance shopping was more pronounced than in previous years, as most insurers had implemented rate increases by the year’s end, making it more difficult for consumers to find savings worth switching their carrier.
Looking ahead: 2025 and beyond
After a year where insurers saw 18% more consumers shopping in 2024 than in 2023, the auto insurance market could experience reduced shopping activity in 2025.
Targeted marketing efforts may become crucial for insurers to employ with consumers hoping to capitalize on the lack of attractive deals.
With potentially fewer offerings in the market, insurers may need to finesse targeting and pricing strategies to pull consumers over the line to switch.
– Chris Rice is the vice president of strategic business intelligence at LexisNexis Risk Solutions.
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