The LexisNexis Insurance Demand Meter – a quarterly report that provides insights into U.S. auto insurance shopping and switching behavior based on billions of shopping transactions – reveals significant trends for automotive insurers and consumers as they navigate the rest of the year.
U.S. consumer auto insurance shopping continues to register as “hot” with 2.9% growth in the first quarter of 2024 year-over-year, following a 4.7% year-over-year increase in the previous quarter. The first quarter of 2024 experienced an 8.7% rise in new policies year-over-year, up from 7.0% year-over-year growth in the last quarter.
This marks the seventh consecutive quarter and the 20th straight month where new policies have outpaced shopper growth. Keep reading to learn what this says about insurance trends as the year continues.
Tax refunds and leap day fuel shopping activity
This year’s tax season provided a boost, bringing more uninsured consumers back into the market, even though their purchase rates were lower than historical averages. In Q1 2024, the influx of new drivers outpaced the number of departures during the same period.
Additionally, 2024’s leap day gave consumers an extra day to shop, contributing to the high volume of activity. This calendar shift potentially made March an outlier, with shopping growth turning negative due to February’s extra day, which resulted in fewer workdays and more weekends in March.
Adjusted for this anomaly, March would have seen a positive gain of 6%. Nonetheless, the annual shop rate at the end of the quarter – 42% – was still higher than 2023’s overall rate of 41%.
Long-term customers bucked trends and shopped for new policies in 2024
Since 2022, loyal and long-tenured consumers – those consumers who have been with their insurer for 10+ consecutive years – have entered the market in record numbers. In the first quarter of 2024, this group accounted for 24% of shoppers, marking a 54% increase compared to Q1 2021 when they accounted for less than 20% of shoppers.
To take advantage of sustained shopping growth expected to continue through most of 2024, insurers will be keeping a close eye on renewals within existing portfolios.
Older drivers are shopping more than other age groups
In Q1 2024, senior drivers 66 and older led all other age groups in shopping growth. As premium costs rise and many older drivers live on fixed incomes, they are increasingly motivated to shop around for better rates.
What’s in store for car insurance shopping for the rest of the year?
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 continue to shop knowing there may be opportunities to save in the future?
If so, this could present another shift in the shopping paradigm. Those insurers with a measured approach to acquiring the right new business and retaining their most profitable business are poised to gain market share as the industry continues to climb back to profitability.
– Adam Pichon is the senior vice president and general manager of auto insurance and claims at LexisNexis Risk Solutions.
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