Carrier Rate Increases, Suppressed Car Sales
and Inflationary Pressures Continue to Stall Growth
ATLANTA, Aug. 11,
2022 /PRNewswire/ -- The latest edition of the
LexisNexis® Risk Solutions Insurance Demand Meter reports that
the annual U.S. auto insurance shopping growth rate, which includes
shopping and new policies, dropped for the fourth consecutive
quarter for the first time since LexisNexis Risk
Solutions began releasing these quarterly metrics. Shopping
was down 2.0% in Q2 2022 versus Q2 2021 as the industry continues
to face significant headwinds, including rising claims costs
forcing insurers to continue to implement rate increases in many
U.S. states. On the consumer side, inflationary pressures and
vehicle shortages are leaving many potential shoppers on the
sidelines where they might have traditionally shopped their
policies.
New policy growth declined 7.1% for the quarter versus Q2 2021
as insurers continued to scale back marketing spend, though this
was an improvement from the 11% year-over-year decrease seen in Q1
2022.
"This confluence of factors – rate taking by carriers due to
profitability concerns; a slowdown in marketing spend; consumers
grappling with inflation and fewer dollars to spend; vehicle
shortages and rising interest rates – these are compounding right
now, leaving the insurance industry in a continued state of flux,"
said Adam Pichon, vice president and
general manager, auto insurance, LexisNexis Risk Solutions. "We've
seen a lot of consumers leaving the market due to affordability
concerns, which means many of those uninsured drivers will
eventually re-enter the market. But the question is when."
Identifying the Right Growth Targets Critical for
Insurers
For the first time since the beginning of the pandemic,
middle-aged consumers (35-46) shopped at the highest rate of any
age demographic, likely due to inflationary concerns and rate
increases at renewal. This comes on the heels of several quarters
in a row of younger shoppers (16-35) leading the way thanks to
Federal stimulus checks and tax filing deadlines being altered due
to the pandemic.
"This middle-aged demographic is traditionally a profitable
segment for insurers," said Pichon. "Even in these challenging
times, carriers who are able to best target this age group stand to
gain market share."
When Will Uninsured Individuals Return to the Market?
As carriers began requiring payments in the latter half of 2021
after COVID-related voluntary and state-issued moratoria on policy
cancellations began to wane, volumes of consumers left the market –
meaning they had dropped their policies between the first of one
month to the next. Our data shows that this metric actually
returned to the levels we have seen in previous years.
According to shopping trends data from LexisNexis Risk Solutions
from the last 13 years, most of these consumers should eventually
re-enter the market.
"The timing could very well stretch into 2023, something
carriers will need to account for as they look ahead to the second
half of 2022," said Chris Rice,
associate vice president of strategic business intelligence,
insurance, at LexisNexis Risk Solutions.
Shopping Expectations
In addition to questions surrounding uninsured drivers
re-entering the market, other factors to keep an eye on for the
next two quarters will be the effect of continued rate increases
and an anticipated rise in car sales relative to recent
quarters.
"Recently, shopping activity has started to slightly tick up
after a slow start to the year and a very poor second half of
2021," said Pichon. "The first half of 2021 had extremely high new
auto sales, which slowed considerably in the second half of the
year, so we're now beginning to trend up slightly as we hurdle that
low point. We do anticipate continued marginal improvement over the
second half of the year, but sustainable growth is more likely to
come later as more shoppers re-enter the market."
Download the latest Insurance Demand Meter.
About the LexisNexis Insurance Demand
Meter
The LexisNexis Insurance Demand
Meter is a quarterly analysis of shopping volume and frequency, new
business volume and related data points. LexisNexis
Risk Solutions offers this unique market-wide perspective of
consumer shopping and switching behavior based on its analysis of
billions of consumer shopping transactions since 2009, representing
nearly 90% of the universe of insurance shopping
activity.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data and advanced
analytics to provide insights that help businesses and governmental
entities reduce risk and improve decisions to benefit people around
the globe. We provide data and technology solutions for a wide
range of industries including insurance, financial services,
healthcare and government. Headquartered in metro Atlanta,
Georgia, we have offices
throughout the world and are part of RELX (LSE:
REL/NYSE: RELX), a global provider of information and
analytics for professional and business customers. For more
information, please
visit www.risk.lexisnexis.com, and www.relx.com.
Media Contacts:
Chas Strong
LexisNexis
Risk Solutions
Phone:
+1.706.714.7083
Charles.Strong@lexisnexisrisk.com
Donna Armstrong
Brodeur Partners for LexisNexis Risk
Solutions
Phone:
+1.646.746.5611
mholman@brodeur.com
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