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Home and Auto Insurance Shopping Increases

As auto insurance shopping rates rose during the fourth quarter of 2023, carrier retention rates dropped.
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home and auto insurance shopping increases

Auto insurance shopping rates rose 4.7% in the fourth quarter of 2023, up from -1.2% over the same period in 2022, according to the LexisNexis® Insurance Demand Meter. Additionally, quarterly year-over-year growth for new policies rose 7%, up from 3.9%, meaning shoppers continued to switch carriers at an increasing rate during the fourth quarter.

Forty-one percent of insured households shopped for auto insurance at least once in 2023, according to LexisNexis, leading to a three percentage point drop in carrier retention levels since the beginning of 2023.

And with the consumer price index for auto insurance rising 20% from December 2022 to December 2023, according to the U.S. Bureau of Labor Statistics, the primary cause of the increase in shopping was for lower auto insurance premiums.

With 39 states experiencing shopping growth in the auto market during the fourth quarter, 15 of those states experienced double-digit growth, likely a result of both rate and marketing activity, according to the report.

However, some insurers are utilizing market dynamics to their advantage. This is evident by the 27% growth in shopping in the direct distribution channel in the fourth quarter, according to LexisNexis. By revving up their marketing spend, direct insurers single-handedly drove this growth, offsetting decreases in shopping in agent-based channels.

Both home and auto insurance shopping are likely to increase in 2024 as mortgage rates reduce, allowing more consumers to enter the housing market and shop for insurance along with new homes, according to TransUnion's latest report "Insurance Personal Lines Trends and Perspectives Report." And despite a persistently sluggish housing market in 2023, homeowners shopping increased compared to 2022.

Further, 17% of consumers plan to purchase or lease a new vehicle in 2024—up from 11% the year prior, which also typically constitutes an insurance shopping event, the TransUnion report said.

"With profitability top of mind in 2024, we expect to see many insurers taking a closer look at their portfolios and in some cases re-underwriting certain policies," said Adam Pichon, senior vice president, U.S auto and claims, LexisNexis® Risk Solutions. "This could yield continued increases in shopping as consumers seek the most affordable policies."

Olivia Overman is IA content editor.