During Q2 2024, U.S. auto insurance shopping and purchasing registered as “nuclear,” the highest point on the LexisNexis Insurance Demand Meter since its benchmarking began more than a decade ago.

The quarterly year-over-year (YoY) shopping growth rate increased by 16.1% compared to a 2.9% increase last quarter, according to LexisNexis Risk Solutions. The quarterly YoY growth for new policies was 19.5% compared to an 8.7% increase last quarter.

“Notably, this quarter’s results were driven by both ends of the market, with record shopping and new business volumes in the preferred segment and a rebounding non-standard market,” said Jeff Batiste, LexisNexis U.S. Auto Insurance Client Engagement senior vice president and general manager. “This is the latest sign of the strengthening and stabilizing personal lines market and has overall policy-in-force growth trending back to historical norms.”

“Many carriers substantially increased their marketing efforts, which were acknowledged by motivated consumers seeking to mitigate rate
increases in both their auto and home policies,” LexisNexis said. “This growth occurred despite sluggish vehicle sales that were exacerbated by the software outage that plagued dealerships across the country during the last two weeks of June.”

By the end of Q2, the annual shop rate was up to a record 42.3%, led by four states with annual year-to-date shop rates over 50% — Texas, Florida, Georgia, and Arizona.

A slowdown in insurance shopping through about half of last year due to insurers pulling back money on advertising and reimplementing underwriting restrictions coincided with “significant rate-taking activity” by the industry, LexisNexis said.

“Coupled with this year’s atypical mid-year surge in shopping volumes [that] has led to the record growth rates in Q2 2024. At least part of that surge was driven by carriers who reinstated marketing efforts and consumer lead purchasing to take advantage of the rate-driven shoppers.”

LexisNexis also found that the home insurance market is fueling increased auto insurance shopping because more than half of shoppers own a home or condo.

In a recent consumer study, LexisNexis found that nearly four in 10 respondents with an existing insurance policy are shopping their insurance regularly, with 38% shopping their auto policies at least once per year, and 36% shopping their home insurance policies just as frequently.

“In 2023, we highlighted that certain regions or states, such as Texas, could serve as a potential bellwether for the rest of the country after its implementation of increased marketing expenditures and rate adjustments netted a profitability outcome,” said Chris Rice, LexisNexis strategic business intelligence vice president, in a news release.

“At present, it is evident that other regions took notice and capitalized or are capitalizing now on that same window of opportunity. Consumers, for their part, have shown a heightened sensitivity to price and predisposition to combined personal line shopping that could give carriers an opportunity to capitalize further.”

LexisNexis also found:

• • At the end of the quarter, 21% of the auto policies in force were written in the last 12 months.
  • Carriers reinstated marketing and new business lead purchasing in Q2 to take advantage of rate-driven shoppers that included both non-standard and long-tenured customers.
  • Direct-to-consumer (non-agent-based) distribution channels grew 38% while captive agent and independent agent channels grew 2.4% and 8.9%, respectively.
  • New policy volumes dipped slightly from May to June, causing shopping growth to outpace new policy growth in June for the first time since April 2023.

LexisNexis predicts that the historic rate of insurance shopping could continue through the rest of the year.

After two years of stagnant growth in the number of policies in force, the second quarter of this year’s increased shopping and purchasing activity approaches near-historic levels so, despite possible fluctuations in shopping levels, recent trends indicate that new policy growth could maintain record volumes through the next quarter, LexisNexis said.

“We anticipate that the convergence of the Summer Olympics and the U.S. presidential election will drive up the cost of media advertising while diminishing its effectiveness, potentially leading to a slowdown in consumer activity related directly to advertising,” said Rice. “However, given the anticipatory action from carriers regarding marketing efforts this quarter, matched by the positive consumer reception, there is reason to believe that heightened shopping activity will continue.”

Earlier this month, Fitch Ratings reported “improving, more favorable” mid-year 2024 results for U.S. personal auto insurance companies will likely continue through the end of this year and into 2025.

Fitch listed several rounds of material price increases and a moderation of claims severity trends as reasons for “vastly improved” profit.

“However, a return to segment underwriting profitability could lead to a sudden flattening of price movement going forward,” Fitch wrote. “Improved underwriting performance will eventually lead to competitive pressure and resistance from policyholders and regulators for further price increases. Companies that are lagging in the turnaround of auto results, including several large mutual carriers, may face difficulty in taking needed pricing actions while also retaining policyholders in a more competitive environment.”

Based on a survey of 2,000 U.S. consumers, LendingTree recently found that 39% of those who have been in a car accident or incident didn’t use their insurance for repairs. And 24% who did file a claim regretted it, more commonly among younger drivers.

Fifty-nine percent said they didn’t use their insurance because the damage was minimal. Forty-four percent said their deductible was higher than the cost. Forty-two percent said they didn’t want their insurance rates to increase.

Regardless of whether they filed for their most recent incident, drivers said they would generally like to avoid insurance when possible. Among insured drivers, 73% of those in an incident generally prefer to pay out of pocket for a small issue than involve their insurance, LendingTree said.

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