U.S. consumer auto insurance shopping and new policy growth have skyrocketed, according to the latest report from LexisNexis Risk Solutions, which found both sectors have achieved "Nuclear" status for the first time since the inception of its benchmarking studies.
This uptick is primarily driven by steep increases in insurance premiums, alongside intensified marketing efforts by insurance companies. The double-digit growth in both shopping and new policies in the second quarter of 2024 points to a potentially massive wave of consumer activity in the insurance sector as companies navigate out of profitability concerns that marred 2023.
"In 2023, we highlighted that certain regions or states, such as Texas, could serve as a potential bellwether for the rest of the country after its implementation of increased marketing expenditures and rate adjustments netted a profitability outcome," said Chris Rice, vice president, strategic business intelligence, LexisNexis Risk Solutions. "At present, it is evident that other regions took notice and capitalized or are capitalizing now on that same window of opportunity. Consumers, for their part, have shown a heightened sensitivity to price and predisposition to combined personal line shopping that could give carriers an opportunity to capitalize further."
Quarterly year-over-year shopping growth rate grew 16.1% for Q2 2024, up from last quarter's 2.9% increase. Quarterly year-over-year growth for new policies showed a 19.5% increase for Q2 2024, up from 8.7% last quarter.
Furthermore, the proliferation of direct-to-consumer channels, which grew by 38% this quarter, contrasts sharply with the more modest growth in traditional captive agent and independent agent channels, which saw increases of 2.4% and 8.9%, respectively.
The report also sheds light on the dual impact of home insurance rate increases. With more than half of auto insurance shoppers also owning a home or condo, rising home insurance premiums are concurrently driving the auto insurance market.
Shopping frequency patterns for both home and auto insurance consumers have followed a similar trajectory. In fact, a recent LexisNexis Risk Solutions consumer study found nearly four in 10 respondents with an existing home insurance policy are shopping for their insurance regularly.
Looking ahead, Rice anticipates that external factors such as the Summer Olympics and the upcoming U.S. presidential election could influence advertising costs and effectiveness, potentially moderating consumer shopping behaviors. However, the proactive marketing strategies employed by carriers this quarter are expected to sustain the heightened levels of shopping activity for the foreseeable future.
