Independent agents' auto insurance volume down 24% in Q1 2020

New findings from LexisNexis reveals how the COVID-19 pandemic impacted auto insurance shopping based on age group, state and shopping channel.

“Insurance is essential to the economy in terms of sustainability and growth. We look at insurance shopping and new policy purchases as barometers for broader consumer behavior as well as specific insurance market conditions relating to rate levels, advertising spend, and changes in mobility,” said Tanner Sheehan, associate vice president of auto insurance at LexisNexis Risk Solutions, in a release. (Photo: Shutterstock)

The U.S. auto insurance sector had a strong start in 2020, with an average year-to-year growth rate of 7% in the first quarter until consumer spending dived with the onset of the coronavirus pandemic, says new data from LexisNexis Risk Solutions.

In its Q2 2020 Insurance Demand Meter, LexisNexis reveals how COVID-19 has impacted U.S. consumer auto insurance shopping, including differences based on age group, geography and shopping channel. The LexisNexis Insurance Demand Meter is a quarterly analysis of shopping volume and frequency, new business volume and related data points.

According to the data, consumer shopping began to change on March 16, with activity declining 11% year-to-year. A few weeks into the pandemic, spending rebounded to an average growth rate of 8%, presumably driven by the receipt of federal stimulus payments, says LexisNexis.

(Source: LexisNexis)

New business volume growth also decreased by 10% in March and 14% in April, representing a 52% YOY decline in Q1 2020.

“The year started with the highest shopping rate ever, with 41% of all policies having been shopped in the past year. But it became clear that COVID-19 started to affect auto insurance shopping activity in mid-March,” said Chris Rice, senior director of data science, insurance at LexisNexis Risk Solutions, in a release. “Not only did shopping volumes decrease, but new business volumes dropped even more as most carriers offered short term rebates to existing customers, making it difficult for consumers to find lower premiums with a new carrier.”

Shopping changes

LexisNexis observed several differences in auto insurance shopping behaviors based on a few factors.

Age group

Shoppers age 35 and younger exhibited the most considerable decline (20%) in auto insurance spending in first-quarter 2020. In contrast, consumers age 55 and older kept on pace with a multi-year growth trend. Their spending increased 32% around the time of stimulus checks, says LexisNexis, but has since leveled to the pre-COVID-19 growth rate.

State-by-state

Among the states with the highest amount of coronavirus cases, New York showed the most significant decrease in auto insurance spending, with volumes declining by 26%. Across the country, volumes dropped as much as 31% to as little as 6% compared to pre-pandemic business, says LexisNexis.

Shopping channels

The direct and independent agent channels were the most affected by COVID-19, with auto insurance volumes decreasing 26% and 24%, respectively. On the other hand, exclusive agent carriers showed a more modest decline of 9%. LexisNexis believes strong advertising and premium rebates by carriers using exclusive agents, as well as increased spending by the 55+ age group, resulted in exclusive agents experiencing better volume in Q1.

According to LexisNexis, consumers who prefer the direct and independent agent channels ”are more likely to be classified as non-standard, a segment which traditionally sees more turnover and is considered higher risk. The non-standard market saw shopping growth drop more than 30 points during the peak of the crisis and then surge temporarily with the stimulus checks.”

Read the full report on the LexisNexis website.

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