Auto Insurance Shopping Activity Grew in Fourth Quarter

Tue, 23 February 2021  |  insurance automotive 

LexisNexis® Risk Solutions' latest Insurance Demand Meter found both shopping and new auto insurance business policy volumes increased overall in the fourth quarter, and that despite the ups and downs throughout the year, 2020 ended relatively strong. The year concluded with an annual shop rate of 41%, which, while consistent with each quarter in 2020, is the highest since the company began collecting the data.

Shopping activity is hot, but conversion appears tricky
The auto insurance shopping quarterly growth rate averaged 4.7% in Q4, ending the year relatively high at 10.9%. New business growth also increased from the end of the previous quarter to 3.9%, yet the year-over-year growth rate for the quarter was 0.6%, lagging behind shopping activity.

"Considering all the events that shaped 2020, the fact that the market had some growth is a great benchmark for 2021," said Tanner Sheehan, associate vice president of auto insurance at LexisNexis Risk Solutions. "We're already starting to see patterns emerge when it comes to stimulus check distributions, and we look forward to seeing how correlations like that continue to play out in the year ahead."

Gap remains between insured and uninsured shopping
Although both the insured and uninsured segments experienced an uptick in December, shoppers with existing insurance grew 15.1% while those who were uninsured declined -7.6%. With COVID-19 stimulus packages distributed, 2020 concluding rates indicate early signs of an uptick in the uninsured shopper segment heading into 2021, which aligns with the trends we saw earlier in the year with the Q2 stimulus payouts.

Additional key insights from Q4 include:

• Shopping patterns by age normalized: While Q3 growth rates for all age groups stabilized within a few percentage points of each other for the first time, in November growth rates by age group began to shift back toward historical patterns. Q4 ended with those ages 66+ re-emerging as the most active shoppers.
• Shopping with Exclusive Agents: Growth in the exclusive agent channel began to emerge with the initial COVID-19 shutdowns in March, and it continued to strengthen and outperform other distribution models throughout 2020, ultimately ending the year with +16% growth.

"It's promising for the industry to see that the latest round of stimulus checks are enabling Americans to get back on the road and we're cautiously optimistic that as the COVID-19 vaccines are more broadly administered a return to normalcy may be possible. With early discussion of additional stimuli, we look forward to continuing to examine the trends and identifying new opportunities of U.S. auto insurers in the year ahead," Sheehan said.

Source: LexisNexis