LexisNexis Risk Solutions has released research examining US auto insurance shopping and switching behavior, finding that pricing remains the strongest influence on policyholder decisions as consumers continue comparing coverage options following widespread premium increases.
The survey of 3,000 US auto insurance consumers found that 86% of policyholders who switched insurers cited price as a reason. Among consumers who shopped for coverage, 72% were open to changing carriers, suggesting that shopping activity increasingly represents a potential retention risk for insurers.
- Price drives auto insurance switching, with 86% of consumers who changed insurers citing cost and 72% of shoppers open to moving to another carrier.
- Policy bundling offers limited protection against switching, as 40% of bundled customers considered separating coverage and roughly one-third of both bundled and unbundled shoppers changed insurers.
- Insurance premiums increasingly affect vehicle purchases, with 56% of consumers considering insurance costs when evaluating total ownership expenses.
The findings are presented in the company’s white paper, “U.S. Auto Insurance Shopping and Switching Research Report: Examining Why Consumers Shop, Stay and Switch,” which examines price sensitivity, policy bundling, vehicle purchase decisions and events that prompt consumers to seek alternative coverage.
Consumers are increasingly treating auto insurance as an ongoing value comparison, not a one-time renewal decision.
Jeff Batiste, senior vice president and general manager, auto and home, at LexisNexis Risk Solutions
Batiste said shopping behavior can provide insurers with early indications of competitive pressure and potential customer attrition, allowing them to identify retention risks and opportunities to acquire profitable policyholders.
Auto insurance shopping reaches record levels as price drives switching
US auto insurance shopping has reached record levels, with consumers showing greater willingness to compare premiums and change providers.
Of the 72% of shoppers who were open to moving to another insurer, 17% said they were specifically seeking a new insurance company.
The shopping experience itself appears to present relatively few obstacles. Some 87% of respondents said comparing auto insurance options was easier than expected or met their expectations.
Even older policyholders, traditionally among the most loyal customers, are becoming more willing to shop.
Among consumers aged 66 and older who shopped during the past year after not doing so for the previous decade, 64% said they would shop again if premiums increased. Another 18% planned to compare insurance options regularly. According to Beinsure, US auto insurance costs rise as luxury and performance models drive premiums.
The research suggests that broad premium increases introduced by insurers seeking to restore profitability have encouraged comparison-shopping habits that persist even as some carriers begin reducing rates.
Price remains important after customers obtain alternative quotes or switch providers.
Among policyholders who changed insurers, 86% identified price as a reason for their decision. Only 15% of consumers who shopped but stayed with their existing carrier cited a non-rate-related reason for remaining.
The tendency to shop also extends beyond a single switching decision. Among consumers who shopped and changed insurers within the previous year, 89% said they would probably shop again if rates increased, while 96% indicated they would likely change carriers.
These findings suggest that retaining customers through competitive pricing may not establish lasting loyalty, particularly among policyholders who have already demonstrated a willingness to switch.
Bundled auto insurance policies offer less protection against switching
Policy bundling has traditionally helped insurers retain customers by encouraging households to purchase multiple insurance products from the same carrier.
The research indicates that bundled customers are increasingly willing to reconsider those arrangements when comparing prices. Some 53% of consumers had a bundled auto insurance policy when they began shopping.
Among those with bundled coverage, 40% were either open to separating their policies or specifically looking to unbundle them.
Switching rates were also similar between the two groups. Approximately one-third of bundled shoppers and one-third of consumers without bundled policies moved to another insurer.
Although bundled policies generally demonstrate stronger retention, the findings indicate that bundling alone may provide insufficient protection when consumers believe alternative coverage offers better value.
For carriers, the results raise questions about relying on existing multi-policy relationships to retain customers during periods of increased price competition.
Auto insurance premiums influence vehicle purchase decisions
Insurance affordability is also becoming a more prominent consideration when consumers evaluate vehicle purchases. The survey found that 56% of respondents would definitely consider insurance premiums when assessing a vehicle’s total cost of ownership. Only monthly vehicle payments ranked higher, cited by 63% of consumers.
The findings suggest insurance expenses may influence which vehicles consumers consider, whether they proceed with a purchase and when they decide to buy.
Shopping behavior is also closely connected to developments involving vehicles and insurance policies rather than broader changes in consumers’ personal circumstances.
Some 70% of respondents identified an auto- or insurance-related event as the single most important reason for shopping, compared with 24% who cited a life event.
Premium increases were the leading trigger. Nearly half of respondents, or 49%, said their rates had increased or were expected to rise.
Among life events, changes in income were the most frequently cited factor, accounting for 16% of respondents. Moving to another home or state represented just 5% of shopping activity.
Earlier industry-wide premium increases also encouraged lower-risk and profitable customers to compare insurance prices, creating retention concerns extending beyond customers with deteriorating risk profiles.
Insurers face greater pressure to identify policyholder retention risks
The research suggests insurers need to assess shopping behavior more closely as price competition affects both customer acquisition and retention.
Shopping activity can provide an early indication that customers are considering alternatives, giving carriers an opportunity to respond before policyholders move their coverage.
Brad Hames, vice president of insurance acquisition and retention solutions at LexisNexis Risk Solutions, said insurers cannot depend exclusively on broad renewal strategies or established customer segmentation to maintain profitability.
“Policyholders are actively comparing options, and carriers that use industry-wide insurance insights and predictive models to identify shopping signals earlier, price more precisely and engage with customers at the appropriate time will be better positioned to manage attrition risk and acquire the right prospects,” Hames said.
The findings point to a market in which competitive premiums remain central to customer decisions, even among long-standing policyholders and those holding multiple insurance products with the same carrier.
