Insurers’ Efforts to Improve Profitability Drive Auto and Property Insurance Shopping
TransUnion quarterly report finds compulsory bundling with increased cyber coverage a promising strategy
Macroeconomic trends affecting insurance shopping in the first half of 2023 continued throughout Q3. Auto and property insurance shopping rates were flat compared to Q2 2023 but elevated 12% and 6%, respectively, compared to Q3 2022.
In addition to raising rates, insurers are employing other measures to improve their profitability, like suspending distribution and toughening underwriting standards. These efforts have likely motivated consumers to expand their shopping activity with new insurers.
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 markets, as well as survey data about consumers’ behaviors and attitudes.
The search for lower insurance premiums remains a primary driver of auto insurance shopping. The Insurance Information Institute forecasted auto insurance premium growth of 10.4% in 2023—double the 5% premium growth from the previous year.
“In addition to raising rates, insurers are employing other measures to improve their profitability, like suspending distribution and toughening underwriting standards,” said Stothard Deal, vice president of strategic planning for TransUnion’s insurance business. “These efforts have likely motivated consumers to expand their shopping activity with new insurers.”
New vehicle sales were also a contributing factor. A healthy labor market and the increase in employers’ return to work policies are likely motivating consumers to purchase new vehicles. According to J.D. Power, the US new automobile market remains resilient, with the outlook for sales in 2023 increasing to 7% over 2022.
How bundling can attract and retain policyholders
Conversely, home sales and refinancing—two important triggers for property insurance shopping—remain depressed. Homeowners locked into low interest rates are reluctant to sell and purchase new properties at current rates.
However, property insurance shopping remains elevated over 2022. One factor pushing this trend is the hunt for lower insurance premiums. Another is the increased number of insurers requiring bundling or multiline policies. As consumers shop for auto insurance, they may be forced to consider switching their home insurance as well, even if they are happy with their current policy.
With pressure being placed on retaining policyholders, opportunities exist for insurers to consider value-added services outside of basic coverage options. For example, home insurance policies have long included identity theft protection.
The report notes that cyber security threats are evolving and insurers should broaden their offerings. Social engineering scams, in which bad actors trick consumers into clicking a malicious link or sharing personal information, are now one of the most prevalent threats.
Many insurers are exploring ways to assist policyholders due to different types of fraud and cyber risks, including social engineering scams, ransomware attacks and cyberbullying events. Going further, the report recommends adopting preventative solutions that complement existing restorative measures.
One such solution is TransUnion’s TruEmpower™ Scam Blocker, which helps protect individuals, families and small businesses from harmful cyber incidents by blocking fraudulent websites, phishing attempts, and other cyber threats on mobile devices and laptops. Delivered through insurers, Scam Blocker adds value and can give peace of mind to policyholders while assisting to reduce claims costs to insurers.
“TransUnion research has found consumers look to their insurers for guidance and protection in the aftermath of a cyber-attack,” said Matt Cullina, head of TransUnion’s global cyber insurance business. “Providing a robust, preventative measure can help policyholders feel safer online and more secure in their coverage policy.”
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 almost entirely on TransUnion’s extensive internal data and analyses. It includes information on insurance shopping transactions from March 2022 to September 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