Low Inventories Drive Continued Divergence in Property and Auto Insurance Shopping
New TransUnion report shows tight housing market increases rental insurance shopping—particularly among Baby Boomers and Gen X
Property and auto insurance shopping trends were split once again in Q3 2021. TransUnion’s (NYSE: TRU) latest Personal Lines Insurance Shopping Report found that low inventories suppressed insurance shopping for automobiles while boosting the property insurance shopping market through increased activity from both homeowners and renters.
“Soaring housing prices prevented a lot of younger people and first-time buyers from purchasing a home—and sent many homeowners to the rental market. However, much of that latter group comprised people from older generations who took advantage of the ability to cash in on their home’s value, while downsizing their lifestyle at an opportune moment.”
The gap between property and auto insurance shopping during Q3 2021 was greater than the two prior quarters. The three-week moving average for property insurance shopping was between 1% and 8% higher than the previous year. In comparison, the three-week moving average in Q3 for auto insurance shopping was between 2% and 13% lower than one year ago.
The rise in property insurance shopping was primarily driven by home buyers, but rental insurance played a significant role.
“Soaring housing prices prevented a lot of younger people and first-time buyers from purchasing a home—and sent many homeowners to the rental market,” said Mark McElroy, executive vice president and head of TransUnion’s insurance business. “However, much of that latter group comprised people from older generations who took advantage of the ability to cash in on their home’s value, while downsizing their lifestyle at an opportune moment.”
Baby Boomers and Gen X consumers drove much of the rental insurance shopping in Q3. Boomers in particular entered the rental market with more valuable personal belongings and were more apt to seek out renter’s insurance to protect their personal property. It is not yet clear what portion of these groups will remain renters versus those who plan to buy after the housing market cools down.
Lower Auto Insurance Shopping Still Driven by Higher Risk Consumers
While for much of 2020, higher-risk customers—those with a 300–500 TrueRisk Auto Score—were less likely to shop for auto insurance than their lower-risk counterparts—those with a 701+ TrueRisk Auto Score. This tendency dramatically reversed itself in the spring of 2021, and has continued through Q3. The three-week moving average for higher-risk customers was as much as 20% higher than the same period last year, while lower-risk customers were as much as 5% lower than Q3 2020.
Lowering premium costs was still the primary motivation for auto insurance shopping, which means higher-risk customers may be shopping more in an attempt to save money, particularly in light of rising inflation.
In addition, 2021 saw the widening acceptance of online vehicle shopping and vehicle delivery services, an innovation likely accelerated by the pandemic but one that will likely continue to grow in a post-pandemic economy. This may have driven sales among younger buyers in particular, who broadly correspond to the higher-risk group.
The Near- and Long-Term Insurance Market Forces
Aside from the current real estate and auto market trends, there are some additional reasons to anticipate increased insurance shopping. One driver may be natural disasters, such as the havoc Hurricane Ida wreaked in the Northeast, and the worry that similar events will become more common as the climate warms.
In the immediate future, concerns about inflation may continue to drive elevated shopping activity. Also, increased consumer comfort with online insurance research and shopping, combined with streamlined options from insurers, may increase shopping volume.
“Altogether, there are several factors such as online insurance shopping and streamlined policy options that we expect will drive overall increases in shopping. The question is always to what extent customers’ immediate needs will take priority,” concluded McElroy.
For additional insights into the personal lines insurance marketplace, the full report can be accessed here.
About TransUnion’s Insurance Shopping Snapshot Report
The quarterly Insurance Shopping Snapshot Report is based entirely on TransUnion’s internal studies. The insurance shopping trends reported are based on TransUnion’s report which is derived from TransUnion’s extensive database of credit data. It includes information on insurance shopping transactions from July 2020 to October 2021. The report focuses on the credit population, highlighting TransUnion’s data. It also explores a subset of the total insurance shopping population. The report excludes data from insurance customers in California, Hawaii, and Massachusetts, where credit-based insurance scoring information is not used for insurance rating or underwriting.
About TransUnion (NYSE: TRU)
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