The U.S. auto insurance shopping growth rate, which includes shopping for and buying new policies, declined for the third consecutive quarter.
This is the first time since 2010 that insurance shopping rates have decreased for three consecutive quarters.
Shopping in Q1 of 2022 is down 4.8% from the same time last year, but it’s important to note that the beginning of last year is something of an anomaly for various reasons. The CARES Act for COVID relief was freshly impacting markets this time last year with increased unemployment benefits and stimulus checks, which could have contributed to an unusual spike in car insurance shopping.
New car shopping is, of course, strongly tied to shopping for insurance, and the 16% decline in new car sales compared to last year certainly contributed to decreased insurance shopping. This decline, caused in part by chip shortages, labor shortages, inflation, and the pandemic, has increased the prices of used cars, thus increasing the severity of insurance claims.
I don't think it's time to sound the alarm just yet," said Adam Pichon, vice president and general manager for auto insurance at LexisNexis. "The market is still reacting to pandemic-related and macroeconomic factors…and carriers are responding to claims inflation challenges by raising rates.”
Insurance companies are spending less on marketing
Declining auto sales, reduced insurance shopping, and increased claim severity makes insurance companies less profitable in the short term, and they’re offsetting that by spending less money on marketing, which continues the cycle of reduced shopping.
Car insurance advertising is as American as pickup trucks themselves, but it’s still surprising just how important it is to connecting companies to new shoppers—LexisNexis analysis suggests that 3% of the decrease in shopping can be attributed directly to reduced mail marketing.
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