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ATLANTA , May 20, 2025 /PRNewswire/ -- After a three-quarter streak of "Nuclear" activity, U.S. consumer auto insurance shopping remained elevated in the first quarter of 2025, according to the latest LexisNexis^® Risk Solutions U.S. Insurance Demand Meter. U.S. auto policy shopping growth reached "Sizzling" at 16%, and new policy growth came in "Hot" at 8.4%. Both readings represent a slight cooling from Q4 2024.

Key Takeaways

• Shoppers Stay Active: As of March 31, 2025, 46% of policies-in-force were shopped at least once in the past 12 months.
• Shopping and New Policy Growth Remain Elevated: Auto insurance shopping grew 16% year-over-year in Q1 2025, while new policy growth reached 8.4%.
• Tax Season and Tariff Concerns Drive Behavior: Consumer activity was fueled by tax refund-driven shopping and new vehicle purchases, potentially ahead of anticipated tariff impacts.
• Older Consumers Lead the Charge: Policyholders aged 66 and older were the most active demographic, with year-over-year shopping growth of 19.7%.

Key Observations
"Macro forces like tax refund season and tariff concerns are helping shape consumers' auto insurance shopping behavior in meaningful ways," said Jeff Batiste, senior vice president and general manager, U.S. auto and home insurance, LexisNexis Risk Solutions. "We also are seeing traditionally stable, high-value customer segments become more active in the market. That underscores a potential need for insurers to re-evaluate how they engage and retain policyholders who may have previously been considered low churn risks."

First Quarter Trends Influenced by Direct Channel and Tax Season
Shoppers using the direct channel helped drive first-quarter growth across all age groups, with direct distribution outpacing both independent and exclusive agent channels with a 34% year-over-year increase. Meanwhile, the non-standard market segment saw 30% growth, attributed in part by an influx of uninsured shoppers entering the market with tax refunds in hand.

While tax season spurred activity, February's shorter calendar tempered overall momentum. Compared to the Leap Year advantage in Q1 2024, 2025 featured one fewer business day, trimming shopping activity. Still, many regions saw elevated shopping growth, with 10 states reporting increases of 20% or more, including Hawaii (59%), New Jersey (43%), Washington (33%) and Massachusetts (31%).

New Policy Growth Gets a Boost from Refunds and Pre-Tariff Vehicle Sales
New policy growth remained solid, supported by March's momentum. LexisNexis Risk Solutions internal analysis points to a combination of tax refund season and increased vehicle sales as drivers of this trend, as consumers looked to get ahead of potential cost impacts from impending tariffs. Notably, states such as Nevada (39%), New Jersey (31%) and New York (30%) reported new policy growth of 20% or higher.

Loyalty Slips as Market Dynamics Shift
As economic pressures and more aggressive marketing strategies converge, auto policy retention continues to decline. Average policy retention dropped to 78% by the end of Q1, down from 83% in early 2022. Today, policies are churning nearly 30% faster than just three years ago, with roughly six million more policies switching hands annually compared to 2021.

Perhaps more surprising, historically loyal segments, such as policyholders aged 66 and older and those with 10 and more years of tenure, are now contributing significantly to the uptick in shopping and switching behavior. This shift underscores the potential need for insurers to double down on proactive retention strategies.

Older Consumers Top the Charts in Shopping Activity
Older adults, particularly those 66 and older, became the most active shoppers this quarter, growing nearly 20% year-over-year. Meanwhile, the 26-35 age group saw the lowest growth at just over 13%. Rate sensitivity among older consumers on fixed incomes likely played a key role in older shoppers' increased activity, a noteworthy reversal for what has traditionally been a stable segment.

Looking Ahead
LexisNexis Risk Solutions notes that while the full impact of proposed tariffs may not be felt until later in 2025, those currently in effect are already shaping the market. Consumers may fast-track purchases of vehicles and home goods before prices climb and, as a result, insurers could see a ripple effect across both auto and home policy activity. As these lines of business increasingly influence one another, insurance carriers will need to closely monitor shopping trends and refine their acquisition and retention strategies accordingly.

"Carriers are achieving notable underwriting results but continue to face significant retention challenges. Declining retention rates may force carriers to replace lost policies to sustain growth, which could strain their current business models," added Batiste. "Acquiring new business is costly, and these policies often have higher claims frequency than long-standing ones, likely increasing both loss and expense ratios. To help maintain positive underwriting results, carriers should remain disciplined in their underwriting approach."

Download the latest U.S. Insurance Demand Meter.

LexisNexis U.S. Insurance Demand Meter
The LexisNexis^®U.S. Insurance Demand Meter is a quarterly analysis of shopping volume and frequency, new business volume and related data points. LexisNexis Risk Solutions offers this unique market-wide perspective of U.S. consumer shopping and switching behavior based on its analysis of consumer shopping transactions since 2009, representing nearly 90% of the universe of U.S. insurance shopping activity.

About LexisNexis Risk Solutions
LexisNexis^® Risk Solutions harnesses the power of data, sophisticated analytics platforms and technology solutions to provide insights that help businesses across multiple industries and governmental entities reduce risk and improve decisions to benefit people around the globe. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based analytics and decision tools for professional and business customers. For more information, please visit www.risk.lexisnexis.com, and www.relx.com.

Media Contacts:
Annalysce Baker
LexisNexis Risk Solutions
Phone: +1 678.436.1579
annalysce.baker@lexisnexisrisk.com 

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SOURCE LexisNexis Risk Solutions