Harsh winter weather hampered auto insurance policy growth
Despite challenges, auto insurance shopping continued an upward trend after a year of tough stretches due to the pandemic.
Harsh winter weather in February dragged down auto insurance shopping, according to LexisNexis Risk Solutions’ latest Insurance Demand Meter. However, the market roared back in March with “notably large” year-on-year gains. Overall, new business grew around 7%, and auto insurance shopping was up shy of 5% during 2021’s first quarter.
“March marks the one-year anniversary of the beginning of pandemic-related shutdowns, which brought much of our lives — including auto insurance shopping and switching — to a screeching halt. A year later, we are starting to hurdle that very deep trough from the first quarter of 2020, and this is reflected in this quarter’s Demand Meter,” Tanner Sheehan, associate vice president, auto insurance, LexisNexis Risk Solutions, said in a release. “The end-of-quarter growth is even more notable when you consider the sharp mid-quarter drops from Winter Storm Uri and a delay in tax credits and returns.”
Abnormal February
While the new year typically brings a boost to auto insurance shopping as consumers turn tax credits and returns into car purchases, the market softened considerably in February, LexisNexis reported.
Most notably, Winter Storm Uri’s system touched the entire country, with Texas seeing a concentration of its destructive force. Damaged infrastructure and power outages led to a 41% decline in shopping volume in the state during February. However, many surrounding states and much of the Eastern Seaboard were also affected.
Additionally, insurance companies located in the path of the storm suffered system outages. This caused quotes to drop in 48 states and the District of Columbia. Nationwide, shopping fell off 4.6% during the week of the storm. This came after a more than 10% gain the week prior, LexisNexis reported.
Delays in tax credits and returns compounded these challenges further, particularly for markets hit by the storm.
While February came and went with a vicious roar for the auto insurance market, March showed a rebound with new volume growth up nearly 28%. LexisNexis noted income tax funds began arriving in meaningful numbers in March and new policyholders started onboarding.
“As people return to a normal way of living, we expect the industry and shopping activity to bounce back. Carriers will need to be prepared with their new business and renewal programs to take advantage of shopping growth and build on their brand promises,” Sheehan said.
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