Auto Insurance Shopping Bolstered by Increased Vehicle Sales and Search for Lower Rates
TransUnion quarterly report finds higher interest rates dampen property insurance shopping
Auto insurance shopping rates were up 12% in Q2 2023, compared to the same time in 2022. While vehicle sales played a role in this increase, the search for lower insurance premiums was the primary driver, as the Consumer Price Index for motor vehicle insurance rose 17% in June 2023, compared to June 2022.
The findings are part of TransUnion’s (NYSE: TRU) latest quarterly Insurance Personal Lines Trends and Perspectives Report, which includes trends in the auto and property insurance industries, as well as survey data about consumers’ behaviors and attitudes.
There was a drop in shopping activity among riskier consumers in Q2 2022, partly due to insurer’s reduced marketing spend; however, we saw a rebound in activity from that segment in Q2 2023. Lower risk consumers have been consistently shopping at higher rates for the past 12 months.
Despite historically high vehicle pricing and increased auto insurance premiums, J.D. Power's US automotive forecast for June 2023 estimated a 23% boost in new vehicle sales year-over-year. Meanwhile used car sales dipped slightly as a result of improved new vehicle inventory.
“There was a drop in shopping activity among riskier consumers in Q2 2022, partly due to insurer’s 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.”
Year-Over-Year Percent Change in the Number of Auto Insurance Shoppers by Credit-Based Insurance Scores
Higher Risk Consumers
Moderate Risk Consumers
Lower Risk Consumers
Property insurance shopping slows but remains elevated
The report found that homeowners are also shopping for lower rates, with property insurance shopping among that group rising 13% in Q2 2023 compared to the same time last year. However, the shopping rate was down 7%, compared to Q1 2023, most likely due to increasing interest rates and stubbornly high home prices.
This situation presents potential challenges and opportunities for insurers with younger Gen Z and Millennial customers. As these groups are kept priced out of homeownership, some may opt to live in regions more prone to natural disasters, which has significant implications for insurance losses.
Others may simply choose to continue renting, which opens an opportunity for insurers to modernize their renter’s insurance offerings. In addition, this group will likely need a different approach for marketing efforts.
“It’s time for insurers to start thinking about how to most effectively engage with their upcoming Gen Z customers,” said Deal. “We know they are more likely to learn about new products and services from social media and appreciate receiving personalized offers.”
Insurers interested in achieving better engagement with varying customer segments should consider leveraging tools like TransUnion’s TruAudience™ line of solutions.
To read the complete Insurance Personal Lines Trends & Perspectives Report, click here.
About TransUnion’s Insurance Personal Lines Trends and Perspectives Report
This quarterly publication examines trends in the personal lines insurance industry, including shopping, migration, violation, credit-based insurance stability and more. The Trends and Perspectives Report research is based entirely on TransUnion’s extensive internal data and analyses. It includes information on insurance shopping transactions from January 2022 to June 2023. However, the report excludes shopping data from insurance customers in California, Hawaii (auto), Massachusetts (auto), and Maryland (property), where credit-based insurance scoring information is not used for insurance rating or underwriting.
About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company with over 12,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world. http://www.transunion.com/business