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

Staff Report From Georgia CEO

Friday, May 17th, 2024

Key takeaways

  • 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. 

Tax refunds, older shoppers and Leap Day fuel shopping activity

  • 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." 

Looking ahead
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.