- U.S. auto insurance shopping surged by 16% year-over-year in Q1 2025, marking "Sizzling" growth.
- New policy growth reached 8.4% during the same period, described as "Hot".
- Policy retention dipped to 78%, with consumers aged 66+ leading a 19.7% increase in shopping activity.
The latest report from LexisNexis® Risk Solutions reveals substantial activity in the U.S. auto insurance market for the first quarter of 2025. Auto insurance shopping expanded by 16% year-over-year, maintaining considerable momentum from previous high levels, now characterized as "Sizzling". Concurrently, new policy growth was recorded at 8.4%, signifying robust market dynamics.
While the direct distribution channel saw a significant 34% year-over-year increase, surpassing agent-led channels, policy retention rates declined to 78% from 83% in 2022. This represents a notable shift with policies churning 30% faster compared to three years ago, contributing to six million more policies switching hands annually since 2021.
Older demographics, particularly consumers aged 66 and above, demonstrated a 19.7% increase in shopping activity, highlighting a significant behavioral change within traditionally stable segments. The market's activity was partly attributed to the tax refund season and upcoming tariff impacts, prompting consumers to expedite vehicle purchases.
Ten states reported auto insurance shopping growth of 20% or more, with Hawaii leading at an impressive 59%, followed by New Jersey (43%), Washington (33%), and Massachusetts (31%). This expansive growth across different states reflects a heightened consumer engagement in the auto insurance sector.
The trends indicate a potential need for insurers to reassess engagement and retention strategies, given the increasing activity among historically loyal customer bases. With anticipated tariff effects and economic pressures, insurers might face challenges in maintaining policyholder loyalty while managing acquisition costs and potential increases in claims frequency.
