Auto insurance shopping growth dropped in Q3
Shifting demographics in auto policy shopping are likely to become the norm, says LexisNexis.
Auto insurance policy shopping growth dropped to -1.2% in the third quarter of 2023, according to the latest LexisNexis Risk Solutions Insurance Demand Meter – quite a drop from the 5.2% growth seen in Q2 2023. The rate at which customers switched or purchased new coverage fell from 10.2% growth in Q2 2023 to 3.9% in Q3, but despite the drop in growth, LexisNexis reports record volumes of new policies in August and September.
The Demand Meter notes there have been minor shifts in key auto insurance shopping demographics over the last few quarters; including growth in the 65+ age group, which now comprises 14% of those who purchased new policies, up from 10% in early 2022. Growth in the older demographic was countered with a drop in purchasers under 35 – falling from 40% in early 2022 to 35% in Q3 2023.
There is also a higher number of new people entering the insurance market, with the rate of uninsured shoppers making up 63% of overall new policies in Q3, up from 60% in the previous quarter.
“This quarter’s Demand Meter reminds us that the industry is still reconciling with significant macro trends that have shifted the auto insurance market significantly,” Adam Pichon, senior vice president of Auto Insurance and Claims at LexisNexis Risk Solutions, said in a release. “Ongoing rate increases and changing demographics continue to contribute to near-record shopping volumes, while claims severity continues to drive profitability challenges for insurers. The combination of these trends has created a challenging environment that has been the theme for insurers in 2023.”
LexisNexis attributes this demographic shift to the trend of household consolidation – with the average number of drivers per policy continuing to grow as parents add adult children to their policies and, in turn, adult children add their retired parents.
“Changing shopping demographics and behaviors are likely to be the norm thanks to tightening consumer budgets and ever-increasing auto insurance premiums,” Pichon remarked in the release. “Claims frequencies continue to hold steady, but with severity levels still well above historical averages – largely fueled by high vehicle repair costs – insurers remain focused on making key strategic decisions on whether to implement additional restrictions or conversely look to gain market share as they move toward profitability.”
“As we enter the holiday season, insurance shopping activity traditionally tends to slow,” continued Pichon. “But ever-increasing premiums, combined with tightening consumer budgets, could lead to a change in traditional shopping behaviors.”