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How Auto Insurers, Consumers Rode the Bumpy Year of Pandemic

The U.S. auto insurance market experienced market disruption due to pandemic-related shopping volatility, an uptick in dangerous driving, policy renewal delays and fewer claims.

But by the end of 2020, shopping volumes closed 5.3% higher than in 2019 and net policy renewals increased after some bumpy periods.

The U.S. Auto Insurance Trends Report from LexisNexis Risk Solutions looks at how consumer behavior and carrier business practices tied to the auto insurance policy lifecycle diverged in 2020 from typical patterns largely due to the influence of Covid-19.

According to the report, auto insurance shopping data fluctuations were turbulent throughout 2020. However, year over year, 2020 shopping volumes closed 5.3% higher than 2019 with an annual year-end shop rate of 41%.

Cyclical policy renewal patterns for many consumers were interrupted by the pandemic with new business policies written down 12.6% in April 2020 and 10.4% year over year. Even so, this unusual activity still prompted an overall net increase for 2020, bringing market retention to 83%.

Other findings from the LexisNexis Risk Solutions report:

• Empty roadways gave rise to dangerous driving behavior with a noted increase in high-speed instances first observed in mid-March 2020. That trends held at 10% higher than 2019 figures for the remainder of the year.
• New generational data illustrated an increase of Driving Under the Influence (DUI) violations among younger drivers – particularly those in the Generation Z age segment, with an approximate 50% increase in recorded violations in March and April of 2020.
• Collision claims decreased, but severity rose, much like the reduction in total miles driven, the volume of collisions and subsequent claims dropped considerably. Collision severity saw a 3.7% year-over-year increase in 2020.