A recent report has revealed shifts in consumer shopping and switching behaviors across various sectors of the insurance industry.
According to the Q1 2025 J.D. Power Insurance Intelligence report, the shopping rate in the auto insurance sector for Q1 was 14.1%, a slight increase from the previous quarter and a significant increase of 1.3 percentage points from a year ago.
Despite this elevated shopping activity, the switching rate remained largely unchanged at 4.1%, a small decline from the previous quarter but an improvement over the same period last year. According to the note, this suggests that while consumers are actively exploring their options, fewer are making the decision to switch providers.
The auto insurance market is expected to shift toward more traditional underwriting, with insurers focusing on increasing policy growth while raising premiums for higher-risk policyholders. Insurers will need to contend with rising claims costs due to vehicle price increases and repair costs, a challenge which the report said is exacerbated by ongoing supply chain issues.
For home insurance, the shopping rate was 6.6%, reflecting a modest increase of 0.1 percentage points from Q4 but a slight decrease compared to the previous year. The switching rate for home insurance was 2.5%, a decrease of 0.2 percentage points from the prior quarter, although it was up slightly year-over-year.
According to the report, insurers in this space are likely to focus on maintaining profitability, with the rising costs of home repairs and construction materials posing a challenge. Rate increases and tighter underwriting strategies could be employed as insurers adjust to the higher costs of rebuilding and repairs, which have been driven up by inflation.
Meanwhile, renters’ insurance saw a shopping rate of 6.2%, down 0.2 percentage points from the previous quarter but up 0.5 percentage points from a year earlier, according to the report. The switching rate was 3.8%, a notable drop of 0.9 percentage points from Q4 2024, though still slightly higher than in the same period last year.
These shifts indicate that while fewer renters are shopping for insurance compared to the prior quarter, interest in the market has increased year-over-year, the report said, adding that the relatively stable nature of renters’ insurance means that switching rates are not as volatile.
Looking ahead, the report said broader economic factors, such as tariffs and inflation, are expected to continue influencing consumer behavior in the insurance market. The rising cost of goods and services, including building materials, is expected to put pressure on both auto and property insurance premiums.
Additionally, the ongoing uncertainty around tariffs, particularly on items like steel, aluminum and other construction materials, could further elevate costs. As a result, insurers may adjust their focus toward maintaining profitability, with a particular emphasis on rate increases and refined underwriting practices to offset higher claims cost.
The full effects of economic uncertainty on shopping and switching behavior are expected to become clearer as the year progresses. Insurers will need to remain adaptable, adjusting their pricing models and retention strategies to manage the impact of rising costs and shifting consumer preferences.
