Insured shopping grew 10% during the quarter, while uninsured shopping saw negative trends from August into September. (BLACKWHITEPAILYN/Shutterstock.com)During the third quarter, auto insurance shopping and new business policy volumes increased, according to LexisNexis Risk Solutions’ Insurance Demand Meter. However, both slowed slightly in August as a result of CARES Act benefits ending as well as hurricanes and wildfires.
The quarterly growth rate averaged 6.1%, and Q3 2020 ended with gains of 7.6%. New business growth, which hit 5.7% during the quarter, was nearly twice that seen in the previous year and outperformed the five-year quarterly average, according to the Demand Meter.
“Despite a challenging Q3 for many consumers, as the economy continues to improve and unemployment levels normalize, we expect consumers to return to the auto insurance market, which will accelerate new policy growth and ultimately help to decrease uninsured motorist claim frequency,” Tanner Sheehan, associate vice president of auto insurance at LexisNexis Risk Solution, said in a release.
A major trend uncovered by the Demand Meter is the difference between insured and uninsured shopping. Insured shopping grew nearly 10% during the quarter, while uninsured shopping held steady with a growth rate of -10% starting in August and continuing through September. LexisNexis attributed the drop to unemployment benefits expiring in July and insurance cancellation moratoria.
Impact from wildfires, hurricanes
While overall rates grew, there were regional differences driven by weather and wildfire events, which resulted in the highest natural catastrophe losses seen since 2017. For instance, after Hurricane Marco hit shopping volumes fell off 18% compared with the same period the year prior and dropped 36% after the Hurricane Laura event, according to LexisNexis. Similarly, when wildfires activity was at its peak, shopping volumes fell off in California and Washington state.
Chris Rice, senior director of data science for insurance for LexisNexis Risk Solution, told PropertyCasualty360.com the fourth quarter started with consistent growth rates comparable to the end of the previous quarter. However, they were impacted by the elections and higher volume growth during November and December 2019 compared with the months prior.
Additionally, rising cases of COVID-19 have the potential to impact the market, he explained.
“It is easy to imagine that new shelter-in-place orders could be issued, but there is also reason to believe that the impact on shopping may not be as drastic as before if they are implemented,” Rice said. “Another major influencer could be how carriers react to the ‘new’ driving patterns if they persist, like less dense rush hours and lower overall miles driven. If they result in lower premiums, then shopping will surely be impacted.”
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November 23, 2020 at 06:00PM
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Auto insurance shopping, new business volumes grow in Q3 - PropertyCasualty360
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