The U.S. auto insurance market continues to evolve rapidly, and the second quarter of 2025 brought a mix of momentum and moderation.
While the industry is still riding the wave of record-breaking auto insurance shopping activity from the past two years, the sharp increases it has seen over the past few years are beginning to cool, as shopping growth hurdles over 2024 numbers.
Yet, the market remains dynamic, with consumer behavior, rate changes and channel preferences playing pivotal roles.
Auto shopping is still ‘hot’ but down from the previous year
In the second quarter of 2025, auto insurance shopping activity was classified as “hot,” with a 9.4% quarterly year-over-year increase. This marks a slowdown from the 16% surge in the first quarter but still reflects strong consumer engagement.
Meanwhile, new policy growth entered “warm” territory, rising 3.6% compared to the same period last year — a dip from the 8.4% growth recorded in the previous quarter.
This suggests that while consumers are still actively shopping for insurance, the shopping frenzy of recent quarters may be settling into a more sustainable rhythm. The market is adjusting, but it’s far from stagnant.
Direct-to-consumer channel sees 23% growth
One of the most striking trends in Q2 2025 was the continued dominance of the direct-to-consumer channel.
Consumers overwhelmingly chose this channel for the eighth consecutive quarter compared to using exclusive or independent agents, posting an impressive 22.8% quarterly year-over-year growth.
This growth is likely the result of more insurers re-igniting marketing engines and increasing underwriting appetites.
New Jersey, Texas, California, Florida lead the nation in shopping
Geography played a significant role in shaping the Q2 2025 insurance landscape. States like New Jersey (33%), Texas (17%), California (16%) and Florida (9%) led the nation in shopping volume. With their large consumer bases, these populous states helped offset slower growth in other regions.
Interestingly, only two states – Hawaii and New Jersey – achieved shopping growth of 20% or higher in Q2 2025, compared to 10 states in the previous quarter.
Every state except Wyoming experienced slower shopping growth. Shopping growth across all age groups also decelerated. This suggests a broader market shift, with fewer pockets of explosive growth and more uniform moderation.
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Second quarter sets benchmark 46.5% shop rate
The second quarter of 2025 set a new benchmark: 46.5% of all active auto insurance policies were shopped at least once in the past 12 months (this means the consumer requested a quote from a company that’s not their insurer). This is the highest rate ever recorded by the LexisNexis Insurance Demand Meter.
This milestone underscores the growing consumer appetite for better deals and personalized coverage. It also highlights the importance of retention strategies for insurers, who face increasing challenges to keep their customers from jumping ship.
Rate reductions help spark new business
One key driver of new policy growth in the second quarter was the prevalence of rate reductions. Nearly 40% of Q2 rate filings among the top 25 auto carriers decreased, with an average reduction of 4%. These cuts helped maintain elevated new business volumes and encouraged consumers to explore switching options.
On the flip side, the average rate increase was 4.4%, likely stemming from states that were slower to implement the widespread hikes seen over the past few years. This mix of increases and decreases created a dynamic pricing environment that kept consumers engaged and insurers on their toes.
Insurance shopping linked to new car purchases
Another factor influencing insurance shopping was the activity tied to new vehicle sales. Since January 2022, shopping for auto insurance while purchasing a new vehicle has increased 9%, suggesting that consumers are factoring insurance costs into their buying decisions more than ever.
However, while shopping tied to vehicle purchases has grown, actual new policy acquisition in this context has remained steady, hovering between 6% and 8%. In Q2 2025, the figure stood at 8%, suggesting that while consumers explore options, they’re not always committing to new policies during the buying process.
Single drivers, smaller households saw higher shopping growth
The second quarter also revealed a shift in shopping behavior based on household size and vehicle count. Policies with fewer vehicles saw higher shopping growth, while those with multiple cars lagged. This reversal, first observed in 2024, indicates increased rate sensitivity among smaller households.
Even more telling was the surge in activity among single-driver policies. These consumers led the charge in shopping and switching behavior, demonstrating the strongest growth since the second quarter of 2024. This trend suggests a growing focus on affordability, likely driven by tighter budgets and evolving consumer priorities.
This may mean adapting retention strategies for insurers to better serve this increasingly active demographic. Tailored messaging, flexible coverage options and competitive pricing will be key to attracting and retaining these rate-conscious shoppers.
Final thoughts
Q2 2025 was a quarter of contrasts — continued growth tempered by signs of moderation, aggressive marketing met with cautious consumer behavior and regional surges balanced by national slowdowns. For insurers, agility, innovation and customer-centric strategies are essential in this evolving landscape.
The second quarter underscores how the insurance market remains in high gear, driven by the lingering effects of recent hypergrowth in shopping activity. While we are still experiencing growth, albeit at a slightly slower pace, marketing activations, combined with an increasingly price-sensitive customer base, are helping to sustain elevated levels of shopping and new policy acquisition.
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