Drivers Are Shopping, Swapping Auto Insurance Policies at Record Pace

By | May 19, 2023

Drivers are kicking the tires and trading up for new auto insurance policies.

In the first quarter, new policy growth rate was up 17% over the same period in 2022, and a record-breaking shopping growth rate was up 10.2% compared to 2.8% in Q4 2022.

The new LexisNexis® Insurance Demand Meter report examines auto insurance trends and demographics. Overall, the report finds new policy shopping and sales have the pedal to the metal.

Who’s changing lanes?

Higher premiums are driving even historically staid older drivers to shop and switch. The 66+ age category led all age groups in Q1 with 27% growth, with 36–45-year-olds, 46–55-year-olds and 56–65-year-olds tied at 21%.

The 36-45-year-old age group accounted for the most substantial growth early in the quarter. However, that reversed to more traditional patterns in mid-February as older shoppers outpaced younger shoppers.

These figures could signal to insurers that the older market is a ripe target for marketing.

New purchases, new policies

New policy purchases typically peak at the end of the first quarter in tandem with increased car purchases spurred by tax refunds. March’s new policy numbers were highest in 2021, stemming from vehicle purchases made with the final round of Coronavirus Aid, Relief, and Economic Security (CARES) Act stimulus checks. However, 2023 numbers are close behind.

Vehicle sales were down slightly in the first quarter of 2023 (-0.2%), weighted by a drop in used vehicle purchases (-0.4%) compared to 2022. About one in four new policy purchases is associated with a used vehicle purchase.

However, new vehicle purchases increased slightly (0.4%) for the same timeframe. Policy shopping tied to vehicle sales has held steady at around 27% for new vehicles and 36% for used. Still, the downtick in overall vehicle sales has caused a drop in the shopping attributed to vehicle purchases.

Auto agent impacts

In January, the exclusive and independent agent (IA) distribution channels saw 12% growth, with the IA channel growing by 11% in February and 9% in March. The exclusive channel slowed to 5% growth by the end of the quarter.

In the direct channel, January growth was modest but rose to 17% by the end of March.

The road ahead

The second half of 2023 could see a slowdown in shopping growth trends rooted in changing economic conditions impacting vehicle sales.

From the drivers’ side, total vehicle miles traveled has stabilized over the past several quarters, and claim frequencies have consequently remained flat. Claim severities continue to rise, but more slowly. Until they level off, carriers will likely continue to take rate.

Topics Auto Personal Auto

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