If you follow the insurance industry at all, you've no doubt read stories about the disruption of the traditional personal auto insurance market by InsurTech start-ups like Lemonade or Metromile. You've probably also seen many ads touting the ease with which consumers can buy personal auto insurance online with just a few clicks.

Based on the stories and ads, it would be reasonable to assume that an increasing number of consumers are shopping around, comparing rates and coverage. But that's not the case, according to a new report by TransUnion. Instead, the percentage of consumers shopping for personal auto insurance declined to its lowest level in four years.

The TransUnion Auto Insurance Shopping Index found that the percentage of consumers shopping for personal auto insurance declined in each of the past two years to 20.0% at the end of 2017, the lowest level since 2013's 20.4%, as shown in the chart at right. The findings were released May 16 during the 2018 TransUnion Insurance Summit, attended by more than 150 insurance executives.

“The auto insurance marketplace is highly competitive, and this is likely concerning to carriers that fewer consumers are shopping for such policies,” said Mark McElroy, executive vice president of TransUnion's insurance business unit in a statement. “With fewer consumers shopping for auto insurance, carriers must be equipped to provide them with the right offer at the right time, one that provides benefits to the policyholder without adding too much risk to the insurer.”

Fewer ads, fewer shoppers?

TransUnion suggests that the drop in auto insurance shopping may be due to reduced advertising spending by insurance carriers, citing a 2017 report by SNL Financial which found that insurers reduced their advertising spend by 1.6% the year prior. “We believe that rising accident frequency in recent years, due in part to distracted driving, has led carriers to reduce their advertising spend as they adjust rates to account for their increases in loss,” David Drotos, vice president of insurance solutions at TransUnion, said in a statement.

An alternative explanation not addressed by the index is whether consumers buying or leasing new or used cars may be satisfied with the insurance coverage they already have and they may not be interested in changing carriers.

The report notes the resulting decline in insurance shopping was observed throughout 2017. Compared to the same month in both 2016 and 2015, the percentage of consumers shopping for personal auto insurance in 2017 was below those percentages.

Who's shopping?

The TransUnion report also looked at the demographic of the consumers shopping for personal auto insurance in 2017:

15% Male
38% Subprime (Insurance score lower than 600)
68% Have an auto loan
22% Have a mortgage
20% Millennials and Gen Z

For more information about the TransUnion Auto Insurance Shopping Index, visit the TransUnion website.

About the Shopping Index

According to TransUnion, this study is based entirely on TransUnion data assets. The auto insurance shopping trends reported are based on TransUnion's internal Auto Insurance Shopping Index, which is derived from TransUnion's extensive database of credit data. It includes information on more than 500 million auto insurance shopping transactions from January 2012 to March 2018.

The Index focuses on the credit population, highlighting TransUnion's data. It also explores a subset of the total insurance shopping population. The Index excludes data from auto insurance customers in California and Massachusetts, where credit-based insurance scoring information is not used for auto insurance rating or underwriting.

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