Auto Insurance Shopping

When it comes to understanding why auto rates are up, I feel fairly knowledgeable. After all I spend my working life reviewing and reporting on the property/casualty insurance world, so I hear the industry explain again and again why personal auto insurance rates are on the rise — social inflation, more expensive vehicles to repair, driver distraction, and so on.

But that didn’t stop my “sticker shock” this year when I received my personal auto insurance renewal. Like so many of your own customers, I reached out to my agent to see what they could do. After all, my “risk profile” is pretty darn good. No claims in 25 years-plus. And so I shopped, a little. What I found was — nothing better was available. Sure I might save a few bucks but that savings wouldn’t be enough for me to leave my trusted, long-time agent.

However, to most consumers I would imagine that few bucks might get them to jump ship to a new agent or company. In fact, the number of U.S. consumers who shopped for auto insurance grew 6% in the first quarter 2024 compared to the same period in 2023, according to research from TransUnion.

The report, which shows shopping in the West and Midwest was particularly active in the quarter, blames rising costs of living in both regions as the likely cause of the spike. It shows auto insurance shopping was up 12.1% in the Midwest and 10.3% in the West.

The report also shows 23% of consumers indicated plans to purchase or lease a vehicle to replace an existing one within the next 12 months, an increase from 17% in 2023.

This is the second report in recent weeks indicating insurance shopping is on the rise. LexisNexis’ Insurance Demand Meter report shows a continued surge in new auto insurance policies.

In that report, 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 LexisNexis report said that when comparing all years back to 2021, consumers most likely to be retained by their existing insurance company — or those who have been loyal for more than 10 consecutive years — comprised less than 20% of the shopper pool. Through Q1 2024, this cohort has grown to 24% of total shoppers.

That’s me. After 20-plus years with my current agent I have never shopped — until this year.

Adam Pichon, senior vice president, global analytics, LexisNexis Risk Solutions, advised insurers to consider implementing stronger retention strategies, including more proactive and selective monitoring of their renewal books to help identity and retain long-term, loyal policyholders.

I think this is likely a good strategy for independent agencies as well. Agents, take great care of those long-term clients — they will stick around even with today’s high insurance prices.

Topics Auto