Auto premium rate increases spur consumer purchases despite continued reduction in vehicle sales and the aftermath of Hurricane Ian
ATLANTE, November 16, 2022 /PRNewswire/ — The latest edition of the LexisNexis® Risk Solutions Insurance Demand Meter reports quarterly U.S. auto insurance purchases year-over-year increased 1.2% in Q3 2022, versus – 2.0% in Q2 2022, marking the first quarter-over-quarter growth since Q2 2021. The upward momentum came despite new vehicle sales remaining depressed from pre- COVID, and large temporary dips in purchases in late September due to Hurricane Ian. LexisNexis Risk Solutions® observed that much of the third quarter buying activity occurred in states where rate increases were implemented in response to a claims cost spike that began during the second half of 2021.
New business growth increased by 3.9% for the quarter, compared to -7.1% in Q2 2022. Price increases are inducing different consumer profiles to shop, which has led to this significant increase in volumes July new business (-3.0%) to +7.0% and +7.9% in August and September, respectively.
“We started the third quarter with a downward trend in July with the suppression of the growth in purchases that we have seen since the third quarter of 2021, but purchases resumed later in the quarter. August saw matched 2020’s record volumes and then surpassed them in September,” said Adam Pichon, vice president and general manager of home and auto insurance at LexisNexis Risk Solutions. “Clearly, rate activity in the auto insurance market is serving as a key catalyst in enticing U.S. consumers to shop around, particularly in a handful of states where insurers have been able to quickly implement In fact, we probably could have seen bigger increases in shopping if not for Hurricane Ian and the devastation it caused in Florida.”
Shop even after the disastrous impact of Hurricane Ian
At the time of publication of the Insurance Demand Meter, Ian’s insured losses are estimated to be over $60 billion.1 Before the storm, Florida saw auto insurance purchase volumes up 10% through most of August and September, including 13% more the week before the storm. The week Ian made landfall, purchase volumes in Florida decreased by 40%, which had a -6% impact on purchase volumes nationwide the following week.
“Unfortunately, these numbers are not surprising given the density of the areas affected and the amount of destruction inflicted,” Pichon said. “Ian has had a similar impact on shopping patterns seen with some of the other major storms that have made landfall in recent years.”
Rate increases reveal a host of changes in consumer behavior
In the Q2 2022 edition of the Insurance Demand Meter, LexisNexis noted a shift towards the middle-aged buying demographic of 25-55 at the highest level, and this trend continued into the third quarter, even though purchase growth increased across all age groups. While all age brackets sought lower premiums, each group looked primarily to independent agents.
“The independent agent distribution channel has seen the strongest volume growth in recent quarters,” said Chris Rice, Associate Vice President, Strategic Business Intelligence, LexisNexis Risk Solutions. “Just as consumers are shopping in these unstable times, so are independent agents seeking out and advising people who have seen their premiums rise.”
Two notable consumer shifts also emerged during the third quarter:
- Consumers buy more carriers
- Shoppers are increasingly likely to purchase a new policy
“Some of these changes can be attributed to the growth of shopping in the independent channel, as agents can help customers shop multiple carriers at once,” Rice said. “We have also seen many consumers shop through non-independent agent channels. We believe this is likely a result of greater price disparity in the market due to the timing of recent price increases, which which has allowed more consumers to find lower rates from insurers who may not have reacted to the costs of loss as quickly as their competitors.”
A look into the future
States where insurers have already implemented rate increases such as Florida, Georgia, Illinois and Texas are likely to continue to see upward buying growth in the coming months. But a number of other factors that could impact the landscape of the U.S. auto insurance industry may also play a role when it comes to whether buying continues to rise. or stabilize.
“It is very likely that some states will see their buying momentum continue, but we are also monitoring the lasting impacts of Ian, the potential rate hold in many other states and the potential for a rebound in new car sales in the coming months,” Pichon said. . “All of these factors will play a critical role in driving buying habits as we close out 2022 and begin to look ahead to 2023.”
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LexisNexis Risk Solutions will provide further information on the continued impact of Hurricane Ian on the U.S. auto insurance industry in its Q4 2022 Insurance Demand Meter.
About the LexisNexis Insurance Claim Counter
The LexisNexis Insurance Demand Meter is a quarterly analysis of purchase volume and frequency, new business volume, and related data points. LexisNexis Risk Solutions offers this unique, market-wide perspective of consumer purchasing behavior and change based on its analysis of billions of consumer purchase transactions since 2009, representing nearly 90% of the consumer universe. insurance buying activity.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data and advanced analytics to deliver insights that help businesses and government entities reduce risk and improve decisions for the benefit of people everywhere. We provide data and technology solutions for a wide range of industries, including insurance, financial services, healthcare and government. Based in the Atlanta metro area, Georgia, we have offices around the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information and analysis for professionals and businesses. For more information, please visit www.risk.lexisnexis.com and www.relx.com.
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1 https://www.Reuters.com/business/insurers-stare-up-60-bln-hit-hurricane-ian-aig-chief-zaffino-says-2022-11-02/#:~:text=Nov% 202%20(Reuters)%20%2D%20Insurers,catastrophe%20loss%20in%20U.S.%20history.
SOURCE LexisNexis Risk Solutions