U.S. Auto Insurance Shopping Soars in Q1 2025 Amid Tariffs and Tax Refunds

Auto insurance shopping activity in the U.S. remained elevated in the first quarter of 2025, with a 16% year-over-year increase, driven primarily by tax refunds and anticipated vehicle tariff impacts. New auto policy growth reached 8.4%, reflecting increased new vehicle purchases. Older consumers aged 66 and above showed the largest increase in shopping activity at 19.7%, indicating shifts in demographic behavior within the market.

Several states experienced significant growth in insurance shopping, with Hawaii leading at a 59% increase, followed by New Jersey, Washington, and Massachusetts. A notable trend involved a 34% rise in consumer activity through direct distribution channels, surpassing growth in independent and exclusive agent channels. The non-standard insurance sector also saw a 30% increase, influenced by uninsured consumers entering the market with tax refunds.

Despite the rise in shopping activity, policy retention declined to 78% in Q1 2025 from 83% in early 2022, representing a nearly 30% increase in churn over three years. Higher churn rates involve traditionally stable and high-value segments, including older and high-tenure policyholders. This presents a challenge for insurers, as acquiring new customers tends to raise claims frequency and affect loss and expense ratios negatively.

Industry experts advise insurers to adopt disciplined underwriting and finely tune acquisition and retention strategies in response to ongoing market volatility from tariff implementation and economic pressures. Monitoring consumer shopping behavior closely will be essential as shifts may have a significant impact on both auto and home insurance markets. The LexisNexis U.S. Insurance Demand Meter continues to provide comprehensive quarterly insights based on extensive consumer shopping data covering nearly 90% of U.S. insurance activity since 2009.