ATLANTA, Feb. 18, 2025 /PRNewswire/ -- For the third consecutive quarter, U.S. auto insurance shopping remains "Nuclear," according to the LexisNexis® Risk Solutions U.S. Insurance Demand Meter, while new policy growth registered at a "Sizzling" level. Insurers saw 18% more consumers shopping in 2024 compared to 2023 levels. A combination of consumers seeing their rates increasing in conjunction with carrier-led marketing campaigns promoting lower premiums helped entice policyholders into the market. Compared to their behavior in previous quarters, those shoppers didn't necessarily switch their policies.
Q4 2024 US Insurance Demand Meter_Chart A
Key Takeaways
Consumers Continue to Shop: As of December 31, 2024, 45% of policies-in-force were shopped at least once in the last 12 months.
Shopping and New Policy Growth Increased Year-over-Year: Shopping grew 26% in Q4 2024, while new policy growth was 17.7% in Q4 2024.
Insurance Not Included in Holiday Shopping Lists: Similar to prior years, the number of new policies issued dropped in November and December in 2024 as consumers shifted their focus to the holiday season. However, Q4's drop was greater than in previous years, likely as a result of increased rate parity across carriers in the market, which likely hampered consumers' ability to find lower rates.
Key Observations "In the first half of 2024, when consumers shopped their policies, they were looking for opportunities for discounts and were willing to switch. At that time, insurers saw the growth of carrier switching outpacing the growth in shopping because it was easier for shoppers to find more favorable premiums," said Chris Rice, vice president of strategic business intelligence, insurance, LexisNexis Risk Solutions. "However, that trend reversed in the latter half of 2024, with shopping growth outpacing new business, as carriers in a number of states had implemented rate increases, making it harder for consumers to find savings attractive enough to follow through and switch."
New York and Hawaii as Outliers Insurers saw pre-hard market volumes in Q4 for shopping and new business in every state except New York and Hawaii. While overall, new policy growth started to stabilize industry-wide in 2023, New York saw the opposite occur. It dipped even further into negative territory as other states experienced positive numbers. Despite having taken rate increases in line with industry average, by the end of 2024, New York was still below Q4 2020 levels for new policy growth volumes, a likely result of many insurers still employing underwriting restrictions and/or limiting marketing efforts in the state.
Looking Ahead If shopping for new policies (and switching policies) loses steam in 2025, it may signal an opportunity to create targeted marketing messaging for consumers confronted with the limited availability of attractive deals. Marketing efforts are becoming the main driver of shopping activity, and carriers are taking note. As competition for shoppers tightens, carriers may need to balance targeting the consumers they are priced competitively to reach, while focusing on retaining current customers to reach desired growth goals.
"Marketing and pricing strategies will be the key differentiators as insurers work to attract new customers while retaining existing policyholders," said Jeff Batiste, senior vice president and general manager, U.S. auto and home insurance, LexisNexis Risk Solutions. "The start of 2025 has been marked by devastating events, from the wildfires that swept through Southern California to winter storms extending into the South, which compound the heavy losses from last year's natural disasters. While auto insurance rates have largely stabilized for now, the expectation is that insurers will continue to raise rates to respond to these catastrophes. It will be crucial for insurers to monitor how this trend affects home insurance shopping—and, in turn, the behavior of auto shoppers who also own homes."
LexisNexis U.S. Insurance Demand Meter The LexisNexis® U.S. Insurance Demand Meter is a quarterly analysis of shopping volume and frequency, new business volume and related data points. LexisNexis Risk Solutions offers this unique market-wide perspective of U.S. consumer shopping and switching behavior based on its analysis of consumer shopping transactions since 2009, representing nearly 90% of the universe of U.S. insurance shopping activity.
About LexisNexis Risk Solutions LexisNexis® Risk Solutions harnesses the power of data, sophisticated analytics platforms and technology solutions to provide insights that help businesses across multiple industries and governmental entities reduce risk and improve decisions to benefit people around the globe. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based analytics and decision tools for professional and business customers. For more information, please visit www.risk.lexisnexis.com, and www.relx.com.
