A new report out this week offers updated insights on customer buying habits when it comes to personal auto and homeowners insurance.
“Insurance Personal Lines Trends and Perspectives,” a quarterly report published by TransUnion, revealed that insurance customers are increasingly relying on agents to help them comparison shop when it comes to auto and property insurance costs. Shopping rates continued to rise in Q1 2023, up 7 percent and 10 percent, respectively, compared to Q1 2022. The report found that as shopping increased, the number of consumers switching carriers has begun to decrease, an indication that premiums are rising, in general, among most insurers.
The survey, which highlights trends in the auto and property insurance industries and offers data about consumers’ behaviors and attitudes, found nearly 15 percent of consumers owned or used a vehicle without valid insurance coverage or had allowed their coverage to lapse within the past six months. The report found this to be true 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.”
Agent Opportunity
Though digitalization offers a more streamlined shopping experience, consumers are struggling to find price differentiation among insurers. As a result, the survey reported a 25 percent increase in the number of consumers who say they have reached out to an agent to assist with their insurance shopping needs.
Consumers are seeking guidance from agents on bundling insurance policies, along with finding policies that offer the most value.
Telematics Interest Wanes
Fewer shoppers are opting for telematics programs, despite seeking lower insurance premium costs. According to the report, the number of consumers who accepted a telematics offer was 12 percentage points lower than a year ago, from 65 percent to 53 percent.
Some possible explanations for the decrease, the report cites, include the fact that consumers are driving more this year as more employees return to working in the office. In addition, 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 Seek Savings, Too
Similar to the auto insurance market, the report found that property insurance shopping increased in Q1 2023. Due to high mortgage rates and home prices, shopping activity was largely driven by homeowners looking for lower rates rather than coverage for a new home.
This is considered a red flag for carriers, as homeowners are likely investing in renovations in lieu of a new home purchase, the report opined. This could result in a mismatch of coverage, as additions and other significant changes might not be covered in the homeowners’ existing policies.
While savings might be top of mind for consumers shopping for auto and homeowners insurance, it offers a perfect time for agents to reach out to current customers to assess their coverage needs.
“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.”