There has been a decline in both shopping for auto insurance and switching between insurers since the fourth quarter of 2021, according to J.D. Power’s most recent Loyalty Indicator and Shopping Trends report.
Some of the slowdown may be due to a reduction in new vehicle production, J.D. Power said. However, there is a heightened percentage of younger customers shipping for insurance when they do buy a car. Older generations are spurred to shop due to rate-hike pressures, the report found.
“Every generation is seeking more value for their insurance spending,” J.D. Power said.
This value-based shopping trend has boosted the importance of usage-based insurance programs, with an increase in shopping for usage-based policies across generations.
“This is likely the result of the increased cost of mobility, which is driving everyone to look for alternatives to traditional time-based insurance policies,” J.D. Power said.
The company noted an ongoing generational shift in shopping behaviors. While the pool of potential customers for personal insurance has grown, the generational distribution of that pool is changing. Generation X and older customers are declining, and – while unlikely to be shopping for themselves yet, the children of millennials now account for 10% of the population and are influencing their parents’ insurance decisions.
While the number of millennials remained consistent between 2010 and 2019, the number of credit-active millennials nearly doubled in that time, according to data from TransUnion.
“This is likely driving the distribution shift in shoppers becoming more concentrated in younger generations,” said Michelle Jackson, senior director of personal lines market strategy at TransUnion. “Millennials made up the majority of auto shoppers in 2021.”
J.D. Power’s report showed that younger consumers are shopping at a much higher rate than older consumers.
“While older consumers tend to be more rate focused with their shopping, younger consumers, some of whom are just getting into the market, are shopping for the first time as they purchase their first vehicle,” J.D. Power said.
Younger consumers are also more likely to shop due to usage-based programs, a trend J.D. Power predicted would increase as auto insurance rates rose with inflation.