Auto insurance shopping sees quarter-on-quarter decline
A shortage of vehicles and growing claims costs are shaking up the sector, according to LexisNexis.
The final quarter of 2021 saw the rate of personal auto insurance shopping drop to minus 5.9% compared with minus 3.9% during Q3 2021, according to LexisNexis Risk Solutions Insurance Demand Meter.
The rate of new policies written declined to minus 6.9% during Q4 2021 when compared with the same period the year prior. However, this was an improvement from the third quarter of 2021, which saw new policy “growth” of minus 7.3%, a two-year low, according to LexisNexis.
Insurers responded to these developments by scaling back marketing investments for auto insurance, while focusing on rate increases and a return to profitability.
No car to buy blues
Few vehicles for sale had a negative impact on insurers’ bottom lines, according to LexisNexis. While March and April 2021 saw growth in car purchases, fueled by tax returns and the final stimulus checks, by the summer sales had begun to dry up. This was particularly pronounced starting in July, although the trend persisted through the end of the year.
Further, 2021 also saw a return to more normal driving patterns and along with that came an increase in claims frequency. However, this frequency was accompanied by a sharp uptick in claims severity.
“Over the past two years, the automotive and auto insurance industries have been marked by shopping ebbs and flows that have, at times, been a complete departure from what we’re accustomed to seeing — particularly the unusual trends we saw in 2020,” Adam Pichon, vice president and general manager of auto insurance at LexisNexis Risk Solutions, said in a release. “While early 2021 again showed surprising upticks in shopping behavior influenced by macroeconomic conditions, we’re seeing things begin to trend back to the norm over the last two quarters. As a result, consumers across the country have seen their insurance rates rise steadily in recent months as insurers have been on their toes evaluating profitability as more drivers are getting back on the road.”
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