TREND 2
Auto policy shopping
and switching hit
record levels

Shopping Volumes Soar

Policy shopping reached new heights in 2024, following a rise in 2023. At year’s end, more than 45% of policies in force were shopped at least once – the highest shopping rate ever.

At the end of the first quarter, the industry saw the 20th straight month — and seventh consecutive quarter — of positive new business growth. By the end of Q2, the annual shop rate was up to a record 42.3%, and strong purchasing volumes were driven by the rebounding non-standard segment and long-tenured, traditionally stable customers.

The third quarter saw shopping outpace new policy growth, as most carriers had already implemented rate increases in most states, making the favorable deals consumers sought harder to find. That dynamic continued to unfold in Q4 with shopping volumes continuing their momentum; however, the year-over-year growth rate slowed slightly as the industry hurdled Q4 2023’s record-breaking activity.

The home insurance market also influenced auto policy shopping. With more than half of auto policyholders owning a home or condo, home premium increases helped fuel increases in shopping and switching for many auto consumers.

More than

45%

of policies in force were shopped at least once – the highest shopping rate ever.

The Flight from Rising Rates

Increases in premiums, policyholders looking to avoid the increases and insurers reigniting marketing engines led to record volumes of activity.

New business growth outpaced auto policy shopping in the first half of the year. As insurers staggered the timing of rate increases across states, consumers found favorable deals. In the second half of the year, shopping outpaced switching. This was likely due to insurers implementing higher rates over time, making it harder for shoppers to find enticing deals.

_{Source: LexisNexis® Risk Solutions Insurance Demand Meter Q1, 2024}

Increases in premiums, policyholders looking to avoid the increases and insurers reigniting marketing engines led to record volumes of activity.

Your Best Customers are Switching

Rampant policy shopping and switching wasn’t the only headline last year. Who was in the market drew just as much attention.

In Q1, consumers aged 66+ shopped and switched more than other age groups. This cohort experienced the highest growth rate in shopping among counterparts, as the increases in premiums drove those on fixed incomes into the market. While shopping among the 66+ demographic stood out, it was shopping by long tenured customers who stole the spotlight.

In Q1 2024, consumers most likely to be retained grew to 24% of total shoppers, well outpacing the shopping growth of their moderate and low survivability counterparts. This consumer group also switched at a far more rapid pace. New business from long-tenured policyholders grew 16% in Q1 2024 compared to Q1 2023 and increased a whopping 52% when compared to Q1 2021. By the end of Q3, long-tenured shopping increased by 35% year over year, with high survivability shopping topping out at 40%.

_{Source: LexisNexis® Risk Solutions internal Study, 2024}

New business from long-tenured policyholders grew 16% in Q1 2024 and increased a whopping 52% when compared to Q1 2021.

Retention Ramifications

Record levels of auto policy switching translated to 2024’s new policy growth rate of 17.7% year over year. It also added momentum to the ongoing retention decline across the industry.

Since 2021, retention has decreased five percentage points to 78%, resulting in a 22% increase in policy churn. Historically, dropping even one percentage point is significant; however, against a backdrop of heightened levels of shopping and switching activity, insurers may want to focus on their retention strategies, especially when long-tenured customers are hitting the market.

_{Source: LexisNexis® Risk Solutions Insurance Demand Meter, Q1 2025}