Q1 2024 Auto Insurance Shopping Growth Driven by Higher-Risk Consumers

Auto insurance shopping increased by 10% in the first quarter of 2024 compared to the previous year, driven largely by higher-risk consumers according to TransUnion research. This marks a return to traditional insurer practices where rate increases are focused on higher-risk segments rather than across the board, reflecting stabilized rates for mid- and low-risk drivers.

Mercury Insurance highlighted several key factors influencing auto insurance premiums, including driving records, age, location, vehicle type, and credit scores. Driving records remain one of the most impactful factors, as insurers use a driver’s history to predict future risk, with violations potentially causing rate increases.

Age influences premiums, with younger drivers generally facing higher rates due to assessed risk, while mid-aged drivers benefit from lower premiums. Location-based risk also affects rates, as regions with higher crime or accident rates tend to incur higher insurance costs. Vehicle type influences premiums due to factors like repair costs and safety features, with luxury and electric vehicles often costing more to insure due to expensive parts such as EV batteries.

Credit scores are another common rating factor, with insurers associating poorer credit with higher claim frequency and cost, though some states restrict this practice. Furthermore, societal shifts such as an increase in multi-generational households present new risk profiles and market segments, requiring insurers to adapt policy offerings. These demographic and economic trends suggest insurers must consider broader lifestyle changes in managing risk and developing product strategies.