Auto Insurance Shopping Continued to Rise Even as Rates Stabilized in Q2 2024

TransUnion report finds court record data essential to helping insurers capture driving violation histories that enable improved risk segmentation and pricing accuracy

CHICAGO, Aug. 13, 2024 (GLOBE NEWSWIRE) -- Auto insurance shopping volume set a new record for the second consecutive quarter, according to new research from TransUnion (NYSE: TRU). The number of U.S. consumers shopping for auto insurance was up 7%, compared to Q2 2023 (YoY).

This trend has been driven in recent years by increasing insurance premiums that motivated consumers to shop for lower rates. However, for the first time since December 2021, the month-to-month Consumer Price Index for Motor Vehicle Insurance decreased—a 0.2% drop that occurred between April 2024 and May 2024.

The slight shift could signal that insurers are approaching rate adequacy and prospective loss trends could be moderating. These insights and more are part of TransUnion’s latest quarterly Insurance Personal Lines Trends and Perspectives Report.

“It is very encouraging to see indicators that carriers are returning to rate adequacy, and ultimately profitability,” said Stothard Deal, vice president of strategic planning for TransUnion’s insurance business. “TransUnion’s research has uncovered ways for insurers to accelerate the move to profitability and prepare to resume marketing activity in a more-efficient manner.”

Driving record and violation insights
One means for carriers to shorten the path to profitability is by leveraging court records in addition to state Motor Vehicle Records (MVR) to assess driving history. Beginning with the pandemic, states across the U.S. began issuing fewer traffic violations, which insurers have used to price and underwrite risks.

Due to a lower number of violations issued, auto insurers have been capturing fewer dollars in surcharge premiums, thereby contributing to negative premium trends. TransUnion estimates the declining volume of traffic violations starting in 2020 has cost the auto insurance industry an estimated $200 million per year in lost premium capture.

In addition, more states have adopted automated traffic enforcement, though reporting varies significantly. For example, 17 of the 27 states that currently use automated traffic enforcement prohibit the use of these violations in insurance rating and underwriting. As a result, from 2019 to 2023, states with automated enforcement saw a 25% decrease in violations compared to a 5% decrease in states without.