LexisNexis Insurance Demand Meter Shows Continued Downward Pressure in U.S. Auto Insurance Shopping Patterns

Rhea-AI Summary

The latest LexisNexis Risk Solutions Insurance Demand Meter indicates a 2.0% decline in U.S. auto insurance shopping growth for Q2 2022, continuing a downward trend for the fourth consecutive quarter. New policy growth decreased by 7.1% year-over-year, impacted by rising claims costs and a reduction in marketing expenditure. Inflationary pressures and vehicle shortages are further deterring potential shoppers. However, middle-aged consumers are increasingly engaging in shopping, which presents opportunities for insurers targeting this demographic.

Positive

• Middle-aged consumers (35-46) displayed the highest shopping rate, providing a profitable market segment for insurers.
• Overall shopping activity has begun to slightly increase, indicating a potential recovery.

Negative

• Annual shopping growth rate fell 2.0% in Q2 2022 compared to Q2 2021.
• New policy growth declined by 7.1% in Q2 2022 versus Q2 2021.
• Ongoing inflation and vehicle shortages are causing potential shoppers to refrain from policy shopping.

Carrier Rate Increases, Suppressed Car Sales and Inflationary Pressures Continue to Stall Growth

ATLANTA, Aug. 11, 2022 /PRNewswire/ -- The latest edition of the LexisNexis® Risk Solutions Insurance Demand Meter reports that the annual U.S. auto insurance shopping growth rate, which includes shopping and new policies, dropped for the fourth consecutive quarter for the first time since LexisNexis Risk Solutions began releasing these quarterly metrics. Shopping was down 2.0% in Q2 2022 versus Q2 2021 as the industry continues to face significant headwinds, including rising claims costs forcing insurers to continue to implement rate increases in many U.S. states. On the consumer side, inflationary pressures and vehicle shortages are leaving many potential shoppers on the sidelines where they might have traditionally shopped their policies.

New policy growth declined 7.1% for the quarter versus Q2 2021 as insurers continued to scale back marketing spend, though this was an improvement from the 11% year-over-year decrease seen in Q1 2022.

"This confluence of factors – rate taking by carriers due to profitability concerns; a slowdown in marketing spend; consumers grappling with inflation and fewer dollars to spend; vehicle shortages and rising interest rates – these are compounding right now, leaving the insurance industry in a continued state of flux," said Adam Pichon, vice president and general manager, auto insurance, LexisNexis Risk Solutions. "We've seen a lot of consumers leaving the market due to affordability concerns, which means many of those uninsured drivers will eventually re-enter the market. But the question is when."

Identifying the Right Growth Targets Critical for Insurers

For the first time since the beginning of the pandemic, middle-aged consumers (35-46) shopped at the highest rate of any age demographic, likely due to inflationary concerns and rate increases at renewal. This comes on the heels of several quarters in a row of younger shoppers (16-35) leading the way thanks to Federal stimulus checks and tax filing deadlines being altered due to the pandemic.

"This middle-aged demographic is traditionally a profitable segment for insurers," said Pichon. "Even in these challenging times, carriers who are able to best target this age group stand to gain market share."

When Will Uninsured Individuals Return to the Market?

As carriers began requiring payments in the latter half of 2021 after COVID-related voluntary and state-issued moratoria on policy cancellations began to wane, volumes of consumers left the market – meaning they had dropped their policies between the first of one month to the next. Our data shows that this metric actually returned to the levels we have seen in previous years.

According to shopping trends data from LexisNexis Risk Solutions from the last 13 years, most of these consumers should eventually re-enter the market.

"The timing could very well stretch into 2023, something carriers will need to account for as they look ahead to the second half of 2022," said Chris Rice, associate vice president of strategic business intelligence, insurance, at LexisNexis Risk Solutions.

Shopping Expectations

In addition to questions surrounding uninsured drivers re-entering the market, other factors to keep an eye on for the next two quarters will be the effect of continued rate increases and an anticipated rise in car sales relative to recent quarters.

"Recently, shopping activity has started to slightly tick up after a slow start to the year and a very poor second half of 2021," said Pichon. "The first half of 2021 had extremely high new auto sales, which slowed considerably in the second half of the year, so we're now beginning to trend up slightly as we hurdle that low point. We do anticipate continued marginal improvement over the second half of the year, but sustainable growth is more likely to come later as more shoppers re-enter the market."

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: +1.646.746.5611
mholman@brodeur.com

 

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SOURCE LexisNexis Risk Solutions

FAQ

What does the LexisNexis Risk Solutions Insurance Demand Meter report for Q2 2022 regarding auto insurance shopping patterns?

The report shows a 2.0% decline in auto insurance shopping growth and a 7.1% decrease in new policy growth compared to the previous year.

How are inflation and vehicle shortages affecting auto insurance shopping?

Inflationary pressures and vehicle shortages are prompting many potential shoppers to remain on the sidelines, impacting overall shopping rates.

Why are middle-aged consumers increasingly shopping for auto insurance?

Middle-aged consumers are shopping more due to inflation concerns and increasing rates at renewal, making them a key demographic for insurers.

When can we expect uninsured individuals to return to the auto insurance market?

Data suggests that many uninsured individuals are likely to re-enter the market by 2023 as affordability concerns ease.