With the consumer price index for auto insurance rising 17%, shopping rates were driven by consumers searching for lower premiums, as well as an increase in new car sales.
Auto insurance shopping rates rose 12% in the second quarter of 2023 compared to the same time in 2022, according to TransUnion's latest quarterly “Insurance Personal Lines Trends and Perspectives Report."
After the consumer price index for auto insurance rose 17% in June 2023 compared to June 2022, according to the U.S. Bureau of Labor Statistics, consumers searching for lower insurance premiums was the primary cause of the increased shopping.
Increased vehicle sales also contributed to the jump—in June, J.D. Power estimated a 23% boost in new vehicles sales year-over-year—while used car sales have decreased slightly thanks to improved new vehicle inventory.
Among higher risk consumers, defined as those with a credit-based insurance score of 300-500, the percentage of auto insurance shoppers rose 25% year-over-year. Moderate risk consumers, with a score of 501-700, rose 11%. Lower risk consumers with a score of 701 and higher actually outshopped their moderate risk counterparts at 16%.
“There was a drop in shopping activity among riskier consumers in Q2 2022, partly due to insurers' reduced marketing spend; however, we saw a rebound in activity from that segment in Q2 2023," said Stothard Deal, vice president of strategic planning for TransUnion's insurance business. “Lower risk consumers have been consistently shopping at higher rates for the past 12 months."
Homeowners shopping had increased earlier in the year, and while shopping behavior is still elevated, it shows signs of slowing down. Homeowners shopping rates rose 13% in the second quarter of 2023 compared to the same time last year—but decreased 7% from the first quarter of 2023. The decrease is probably attributable to increasing interest rates and high home prices, TransUnion said.
The first quarter of 2023 brought the U.S. property & casualty insurance industry a net underwriting loss of $7.34 billion, the report said, a first-quarter loss not seen since 2011.
“The industry as a whole will continue to react to profitability challenges," the report noted. “As insurers seek rate adequacy through price increases, they are taking short-term loss mitigation actions, including limiting distribution channels, strengthening underwriting on new business, selling policies only as part of a multi-line bundle or even withdrawing from some geographic markets."
AnneMarie McPherson Spears is IA news editor.