More millennials, Gen Z-ers shopping for car insurance
A recent TransUnion study reveals the latest trends in auto insurance shopping.
A recent study from TransUnion shows the number of consumers shopping for personal auto insurance is on the rise, driven largely by the youngest generations.
The “Auto Insurance Shopping Index” study highlighted that the number of consumers shopping for personal auto insurance in 2018 increased year-over-year to 21.7%. Additionally, 14 states saw auto insurance shopping increases of 10% of more YOY, including Texas, Florida, Nevada, Oklahoma, New Maine, New Mexico and others.
“Increased auto insurance shopping is a good thing for both carriers and consumers. Carriers have an opportunity to increase their business while consumers may secure even better rates,” Mark McElroy, executive vice president and head of TransUnion’s insurance business unit, said in a news release.
Younger generations are driving the market
The study revealed that millennial and Gen Z consumers accounted for 39% of the consumers shopping for auto insurance in 2018.
“Younger consumers often do not yet have homes and the need for homeowners insurance. As a result, this makes it easier for them to switch carriers when they aren’t taking advantage of bundles or other promotions,” said McElroy.
Data showed that millennial and Gen Z consumers are shopping 44% more than consumers of other ages. Last year, auto insurance shopping increased 4.1% with millennials and 4.9% with Gen Z-ers, up from 3.9% and 4.6% in 2017, respectively. For comparison, Baby Boomers’ auto insurance shopping increased by just 2.9% in 2018, while Gen X-ers increased their shopping by 3.6%.
Subprime consumers
When compared to prime consumers, the study found that subprime consumers (those with a 600 or lower insurance score) are 68% more likely to shop for personal auto insurance. Subprime consumers also shopped at an average rate of 4.6% in Q1 2019, which was nearly twice as much as prime consumers, who shopped at a rate of 2.6% during the same period.
“Subprime consumers tend to pay higher premiums than prime consumers. They want to find better rates and are therefore shopping more frequently,” David Drotos, vice president of insurance solutions at TransUnion, said in a statement.
Impact of ad spend
The rise in consumers shopping for auto insurance may also be a result of insurance carriers increasing their advertising spend. Marketing spend in 2018 was at an all-time high of $7.5 billion, up from $6.6 billion in 2017, according to Auto Insurance Report.
“Last year we examined the decrease in auto insurance shopping, which we found to be correlated to the decline in advertising spend. We think it’s safe to say that insurers are now seeing the value in increasing those budgets,” Drotos concluded.
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