Nearly 15% of Consumers Allow Auto Insurance Coverage to Lapse 


Auto and property insurance shopping rates continued to rise in Q1 2023, up 7% and 10%, respectively, compared to Q1 2022. However, as shopping has increased, the number of consumers switching carriers is beginning to decrease, indicating premiums are rising among virtually all insurers.

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 industries, as well as survey data about consumers’ behaviors and attitudes.

The survey found nearly 15% of consumers owned or used a vehicle without valid coverage or had allowed their coverage to lapse within the past six months. This was likely among higher-risk consumers (with a credit-based insurance score between 300 and 500), as that segment’s year-over-year percent change in shopping dropped into negative territory, despite the overall increase in auto insurance shopping.

“Insurers have shifted their focus from customer acquisition to profitability and are generally raising their rates,” said Mark McElroy, executive vice president and head of TransUnion’s insurance business. “As consumers have found it more difficult to find a lower premium through online shopping, they are changing behaviors in response.”

An Opportunity for Agents

Digitalization has made online shopping for insurance far easier; however, consumers are finding their price options are not very different at the moment. As a result, there was a 25% increase in the number of consumers who say they have reached out to an agent to assist with their insurance shopping.

The report noted consumers are seeking out agents for guidance on how to find opportunities for savings through bundling, as well as how to get the most value out of their policies. With the right marketing intelligence support for identifying the consumers most likely to be shopping, insurers can increase proactive outreach with the value proposition of a more comprehensive assessment of a consumer’s insurance needs.

More Consumers Pass on Telematics

Despite a strong desire to find lower premiums, fewer consumers are opting for telematics programs. According to the report, the number of consumers who accepted a telematics offer was 12 percentage points lower than a year ago, dropping from 65% to 53%.

The report posits a couple possible explanations for the decrease; one being consumers are driving more this year as more employees return to working in the office. Some may be nervous about the increased risk of being penalized for driving mistakes. In addition, the telematics programs have changed, becoming more complex and often delaying discounts until after a trial period has been completed.

“Until recently, most telematics programs offered upfront discounts simply for opting in,” said Michelle Jackson, senior director of personal property and casualty insurance in TransUnion’s insurance business. “Many of these programs now require consumers to download an app that tracks their driving behavior and to keep it installed for several months before they are eligible to earn the discount. Given that consumers might still see an increased rate due to their driving behavior, it seems that fewer are willing to risk an even higher premium.”

Homeowners Also Looking to Save

Similar to the auto insurance market, property insurance shopping increased in Q1 2023. However, with high mortgage rates and home prices, shopping activity was driven by homeowners looking for lower rates rather than coverage for a new home.

The report identifies this trend as a red flag for carriers, as homeowners are likely investing in renovations in lieu of a new home purchase. This can result in a mismatch of coverage, as additions and other significant changes may not be covered in the homeowners’ existing policies.

“With consumers increasingly looking to their agents for guidance on savings, right now is an ideal time for outreach,” said Jackson. “Agents can use the conversation to offer insights on how bundling policies may help lower premiums, while finding out if there have been any material changes to insured properties.”

For additional insights into the personal lines insurance marketplace, the full report can be accessed here.

Source: TransUnion

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