Personal line shopping to see robust activity throughout 2024, TransUnion reports
Insurance carriers are starting to get on top of rate adequacy challenges, with some closing in on target profitability.
Although personal insurance shopping activity dipped slightly at the end of 2023, TransUnion anticipates the coming year will see robust shopping activity as vehicle supply chain issues ease and lower mortgage rates are expected to spur home and auto purchases and, in turn, the necessary coverages to protect them.
Additionally, 56% of consumers have positive feelings about their household’s financial situation, which could further compel purchasing, according to the credit reporting agency.
Looking at potential demand for auto insurance, 17% of shoppers surveyed said they are planning to purchase a new vehicle in 2024, TransUnion reported. In 2023, 11% of consumers said the same.
On the personal property side, lower mortgage rates are expected and this could lift the housing market and increase demand for home insurance, TransUnion reported.
While lower interest rates might entice buyers, there are questions around the availability of homes to purchase. An October 2023 TransUnion survey found that fewer homeowners were planning on selling their homes in the coming 12 months. However, the same survey found an increase in the number of property owners who were looking to buy another house in the coming year.
Rate adequacy spurs marketing spend
As carriers close in on rate adequacy, with some reporting near-target profitability, TransUnion expects slower overall premium growth. This will make attracting new policyholders more difficult and could result in carriers prioritizing retentions and reevaluating allocations for marketing.
However, budgets are expected to remain tight. As such, marketing dollars should be spent in an efficient and targeted way, TransUnion reported.
To this end, insurers should clean up their consumer data to ensure that duplicate emails and out-of-date contact details are either removed or brought current. This will go a long way in making sure marketing materials are reaching the intended audience, while reducing waste from direct mailers being sent to old addresses or multiple locations.
Carriers should also segment out their highest-value and most active shoppers, such as Gen Z and millennials. Policyholders with high credit scores should also be targeted as they are more likely to shop around for coverage as well, according to TransUnion.
“In the same way that actuaries look at multiple layers of information to better calculate risk, marketers can use rich data to segment their target audiences and reveal high-value individuals,” Stothard Deal, vice president of strategic planning for TransUnion’s insurance business, said in a release. “This could include combining traditional characteristics like financial behavior and driving record with other individual and household profiles and behaviors.”
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