Rate increases lead to highest auto insurance
shopping volumes since inception of Demand Meter in Q1 2020
ATLANTA, May 17, 2023
/PRNewswire/ -- The latest edition of the LexisNexis® Risk
Solutions Insurance Demand Meter reports the quarterly
year-over-year U.S. auto insurance shopping growth rate rose 10.2%
in Q1 2023, up from +2.8% growth in Q4 2022 as auto insurers
continue to implement widespread rate increases. New policy growth,
or the rate at which consumers either switched or purchased new
coverage, continues to be a big story. It was up a staggering 17%
for the quarter compared to Q1 2022, and also increased from 10.2%
growth in Q4 2022, continuing the record upward streak from
November 2022.
"We're still seeing record-high shopping activity and new policy
purchasing as auto insurance rates continue to soar," said
Adam Pichon, senior vice president
of Auto Insurance and Claims at LexisNexis Risk Solutions. "We are
starting to see some stabilization in the market, however, with
claim frequencies flattening out the last few quarters and
severities rising at a slower clip. But until claims severity
levels off and vehicle sales begin to rise again nationwide, it is
likely insurers are going to continue to take rate, so we do expect
to see shopping activity remain volatile at least into the next
quarter as insurers grapple with macroeconomic conditions."
Record-breaking shopping: who is shopping where, and how are
vehicle sales impacting auto insurance rates and shopping?
In January, the exclusive and independent agent (IA)
distribution channels saw 12% growth, with the IA channel growing
by 11% in February and 9% in March. By comparison, the exclusive
channel slowed to 5% growth by the end of the quarter. In the
direct channel, growth in January was modest, but ended at a
whopping 17% by the end of March.
The rate at which shoppers switched or purchased coverage was up
across all demographics, continuing the trend from Q4. Early in the
quarter, the 36-45-year-old age group accounted for strong growth,
but that reversed to more traditional patterns in mid-February as
older shoppers began to outpace younger shoppers. As noted last
quarter, older age demographics, especially those in the
55-65-year-old group that have not historically shopped at a high
rate and were not likely to switch when they did shop, are now
shopping and switching at an accelerated pace.
"Vehicle sales, especially drops in purchases of used vehicles,
are still playing a key role in the dramatic increases in shopping
as vehicle purchases are closely aligned to shopping and switching
events," said Chris Rice, associate
vice president of strategic business intelligence at LexisNexis
Risk Solutions. "Shopping that pertains to a vehicle sale held
steady at around 27% for new vehicles and 36% for used, but the
downtick in vehicle sales overall caused a drop in all shopping
attributed to vehicle purchases, which can naturally lead to
premium increases and more shopping and purchasing in each of the
aforementioned age demographics."
"Another key factor to keep in mind is that Q1 is when we
typically have seen a boost in shopping due to the Earned Income
Tax Credit," continued Rice. "After relatively muted tax season
shopping the past two years when the federal government distributed
those credits earlier than normal, we saw more of a return to the
norm in Q1 as those tax credits hit consumers' wallets during the
traditional time period we normally see."
A Look Ahead
Coming off of 2022's high shopping volumes, there is a
possibility that the second half of 2023 could see a slowdown in
shopping growth trends. Multiple factors will be at play in the
coming months as insurers keep a close eye on claims severity and
frequency, as well as the potential for changing economic
conditions and the related impact on new and used vehicle sales.
Still, in the near-term, Pichon said to expect more rate-taking in
Q2 from insurers, which could lead to continued shopping
volatility.
"Insurers are more likely to continue taking rate until claims
cool down, but vehicle sales are something to watch very closely
for the remainder of 2023," said Pichon. "If claims severity and
frequencies continue to level out and economic conditions improve
to the extent that more cars become available for purchase and
consumers have the means to do so, we very well may see the
shopping growth pendulum begin to tick back to more normal levels.
We're at a bit of an inflection point in the market, and the second
half of 2023 can provide opportunities for insurers who are
leveraging data and analytics to more effectively assess risk and
address profitability head on."
Download the latest Insurance Demand Meter.
About the LexisNexis Insurance Demand Meter
The
LexisNexis Insurance Demand Meter is a quarterly analysis of
shopping volume and frequency, new business volume and related data
points. LexisNexis Risk Solutions offers this unique market-wide
perspective of consumer shopping and switching behavior based on
its analysis of billions of consumer shopping transactions since
2009, representing nearly 90% of the universe of insurance shopping
activity.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data and advanced
analytics to provide insights that help businesses and governmental
entities reduce risk and improve decisions to benefit people around
the globe. We provide data and technology solutions for a wide
range of industries including insurance, financial services,
healthcare and government. Headquartered in metro Atlanta,
Georgia, we have offices
throughout the world and are part of RELX (LSE:
REL/NYSE: RELX), a global provider of information and
analytics for professional and business customers. For more
information, please
visit www.risk.lexisnexis.com, and www.relx.com.
Media Contacts:
Chas
Strong
LexisNexis Risk Solutions
Phone: +1.706.714.7083
Charles.Strong@lexisnexisrisk.com
Donna Armstrong
Brodeur Partners for LexisNexis Risk Solutions
Phone: +1.202.510.3531
darmstrong@brodeur.com
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