More US consumers shop for motor insurance despite COVID-19 challenges

By Ridwan Abbas

Even with the ongoing economic impact of the COVID-19 pandemic, overall personal auto insurance shopping rates in the first half of 2020 surpassed 2019 levels.

The 2020 Insurance Shopping Annual Report by TransUnion found overall shopping rates were higher year over year in the first few months of 2020 until the week of March 22 – near the onset of the pandemic – when shopping plummeted 14% below the previous year. However, shopping rates reversed in May and have continued to trend higher through June.

Nearly one-third (30%) of survey respondents said a major life event was a key force behind their decision to shop for auto insurance, followed by a need to reduce expenses due to COVID-19’s impact on household income (24%). Typical life events that drive auto insurance shopping include marriage, having a child, buying a new home, among others. As the COVID-19 pandemic lingers, new life events may be impacting the need for auto insurance shopping, including job loss and reduction in pay.

Before COVID-19 was declared a global pandemic in early March, TransUnion observed insurance shopping rates trended higher on an annual basis for eight straight months. This upward trend was directly correlated to the insurance industry’s increased marketing spend from 2012 to 2019.

As the pandemic set in and many individuals limited their miles driven, advertising spending fell and carriers turned their attention to positioning themselves as partners in these uncertain times, including through premium rebates. In fact, U.S. auto insurance companies offered about $10.5bn in insurance premium rebates to customers in an effort to provide COVID-19 financial relief, according to the Insurance Information Institute.

The rebates have proven to be beneficial for both policyholders and carriers. TransUnion’s survey reveals 22% of current auto policyholders considered delaying auto insurance payments due to COVID-19. And for the policyholders who recall being contacted by a carrier about a premium relief or discount (45%), six in 10 (61%) said the gesture increased their loyalty to their auto insurer.

Simultaneously, in the time since shopping bottomed out in April, TransUnion observed shopping rates rebound in May to 2.9% and continue into June at 3.1%, exceeding the June shopping rates in both 2019 and 2018.

“While the rebound in shopping rates for May and June is a positive movement, it’s too soon to determine whether this trend will continue given the variety of factors likely at play,” said TransUnion’s vice president of insurance solutions David Drotos,. “As highlighted in the 2020 Insurance Shopping Annual Report, we’re seeing premium rebates, stimulus checks and expanded unemployment benefits through the CARES Act likely contributing to this increased shopping activity. These considerations will be integral for carriers and shoppers in navigating the uncertain days ahead.”

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