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Wednesday, 25 May 2022 11:03

U.S. Auto Insurance Shopping Rate Shows Negative Growth for Third Consecutive Quarter

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The latest edition of the LexisNexis® Risk Solutions Insurance Demand Meter reports the overall annual U.S. auto insurance shopping growth rate, which includes shopping and new policies, dropped for the third consecutive quarter for the first time since LexisNexis Risk Solutions began releasing these quarterly metrics.

Shopping was down 4.8% in Q1 2022 versus Q1 2021---compared to -5.2% in Q4 2021 versus Q4 2020---as the industry continues to grapple with increased claims costs and a 16% decline in new car sales from a year ago.

 

New policy growth declined 11% for the quarter versus Q1 2021 as insurers scaled back marketing spend, and consumers were forced to account for early dispersal of half of the child tax credit. However, some of that decline year over year can likely be attributed to the fact Q1 2021 saw higher than normal seasonal shopping, which was boosted by the final round of stimulus checks from the Coronavirus Aid, Relief and Economic Security (CARES) Act.

 

"The auto insurance and automotive OEM industries are still facing significant headwinds related to decreased marketing spend by carriers, variables in tax refunds for consumers, and new and used vehicle shortages, but I don't think it's time to sound the alarm just yet," said Adam Pichon, vice president and general manager, auto insurance, LexisNexis Risk Solutions. "The market is still reacting to pandemic-related and macroeconomic factors such as chip shortages, inflation and labor shortages, and carriers are responding to claims inflation challenges by raising rates. Rate taking among carriers is expected to continue through 2023, which will likely drive consumers back into the insurance shopping market."

 

With Claims Severity Up, Carriers' Marketing Spend is Down

 

As reported in last quarter's edition of the Insurance Demand Meter as well as the newly released 2022 Auto Insurance Trends Report, suppressed new vehicle sales persisted into Q1 2022 and were down 16% from the year prior. This lack of automotive inventory has also created a ripple effect in driving up used vehicle prices. As a result of more vehicles on the road and the aging car parc, insurance claim severities have been on the rise, particularly for total losses.

 

With an eye on profitability, many insurers have drastically cut their marketing spend. This is having a significant impact, especially in...


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