Insurers’ Efforts to Improve Profitability Drive Auto Policy Shopping

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A new quarterly report found the search for lower premiums remains a primary motivation for auto insurance shopping.

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.

The findings are part of TransUnion’s 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 U.S. 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 noted 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 recommended 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.”

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