2025 Auto Insurance Trends: Elevated Shopping Amid Flat Switching Rates
The Q1 2025 Loyalty Indicator & Shopping Trends (LIST) report by J.D. Power and TransUnion highlights that auto insurance shopping activities remain elevated, with a 14.1% shopping rate that marks modest increases quarter-over-quarter and year-over-year. Despite increased shopping, the switching rate among policyholders remains relatively flat at 4.1%, indicating a steady retention trend. This suggests consumers are actively exploring options but generally maintaining existing insurer relationships.
The report also identifies a strategic shift in the auto insurance market toward prioritizing policy growth with traditional rate-setting approaches that align premiums more closely with risk profiles. This trend reflects insurers’ focus on balancing competitive pricing with underwriting discipline amidst evolving market conditions. Additionally, consumer interest in embedded insurance products—offered directly through vehicle dealers or manufacturers—is gaining traction, particularly among younger demographics such as Gen Z and Millennials.
Embedded insurance appeals to roughly 37% of consumers surveyed, with nearly half of younger buyers expressing interest due to perceived service advantages. However, there is some cost sensitivity as over one-third anticipate higher premiums with embedded insurance offerings relative to traditional channels. This nuanced adoption landscape underscores the importance of service quality and pricing transparency in emerging insurance distribution models.
Supporting these insights, a LendingTree survey reveals that while a majority of policyholders who renewed their coverage did not shop around, those who did shop were primarily motivated by potential savings. Most switchers confirmed achieving meaningful cost reductions, with over 60% saving at least $100 annually. This reinforces the continued role of price competition in consumer decision-making within the auto insurance market.
A separate analysis from Finance Buzz highlights ongoing challenges in consumer understanding of coverage, with only a minority expressing high confidence in their policy knowledge. Concurrently, auto insurance premiums have markedly increased—up 45% since 2019—with significant geographic variability in average costs, emphasizing the need for clear communication and education around insurance products.
Together, these reports depict a dynamic auto insurance market in 2025 characterized by steady shopping activity, cautious switching behaviors, evolving product delivery channels, and ongoing issues related to consumer education and affordability. Insurers and regulators alike must navigate these trends to optimize market efficiency, customer retention, and transparency in an increasingly complex insurance landscape.