High car insurance rates have led to a record number of drivers shopping for new policies in 2024, according to a recent study by LexisNexis. The report found that more than 45% of policyholders looked for alternative auto insurance at least once during the year, marking the highest rate of comparison shopping recorded by the company.
The increase in shopping activity has been attributed to rising auto and home insurance premiums across most states, as well as increased marketing efforts from insurance providers. Insurify projects that by the end of 2025, the average cost for full-coverage car insurance will rise by 7%. The company also expects home insurance costs to grow by 8% over the same period.
Drivers who had remained with their insurers for longer periods were particularly active in searching for new coverage options. According to LexisNexis, policyholders with more than five years at one company made up 24% of all shoppers in 2024. These long-term customers switched insurers more frequently than others, accounting for 16% of new business in the first quarter and reaching 40% by year’s end.
Data from J.D. Power’s U.S. Insurance Shopping Study shows that drivers typically stay with an insurer for about 5.5 years on average, or up to seven years if they bundle auto coverage with other policies like homeowners or renters’ insurance.
Industry experts warn that these trends could impact profitability for insurers. Matt Brannon, a data journalist at Insurify, said: “The property and casualty industry has seen customer retention rates drop dramatically in the past few years due in large part to significant rate increases. It’s a potentially self-perpetuating cycle. Higher rates push more consumers to shop and switch, which can undermine profitability, which could inspire insurers to raise rates further.”
LexisNexis suggested that insurers may need stronger strategies to retain customers as market competition intensifies: “Against a backdrop of heightened levels of shopping and switching activity, insurers may want to focus on their retention strategies, especially when long-tenured customers are hitting the market,” according to its report.
