LexisNexis Q1 2025 U.S. Auto Insurance Demand Shows Strong Shopping and Policy Growth
The LexisNexis U.S. Insurance Demand Meter indicates continued strong activity in U.S. consumer auto insurance shopping during the first quarter of 2025, with a 16% year-over-year increase in shopping and 8.4% growth in new policy acquisitions. This reflects sustained engagement despite a slight decline from the elevated levels seen in late 2024. A significant portion of insured consumers, 46%, had shopped for policies at least once in the past year, emphasizing persistent market dynamism.
Several macroeconomic factors influenced consumer behavior, notably the tax refund season and concerns over potential tariffs, which encouraged purchasing and insurance policy shopping. Tax refunds appeared to enable uninsured consumers, especially within the non-standard market segment, to enter the insurance market, driving a 30% growth in this sector. Vehicle purchases ahead of expected tariff increases further bolstered new policy growth, with certain states like Nevada, New Jersey, and New York experiencing over 20% growth rates.
A notable trend was increased shopping activity from older consumers, particularly those aged 66 and above, who posted the highest growth in shopping behavior at nearly 20% year-over-year. This demographic shift represents a change in traditionally stable and loyal customer segments now exhibiting increased churn, highlighting emerging challenges for insurers in retention.
The direct channel emerged as a key distribution pathway, outpacing independent and exclusive agent channels with a 34% year-over-year increase in shopping activity, indicating a shift in consumer purchasing patterns. Geographic variation in shopping growth was significant, with states such as Hawaii and New Jersey seeing particularly high increases.
Retention rates have declined considerably, with average policy retention dropping from 83% in early 2022 to 78% by Q1 2025. The accelerated churn rate implies insurers must invest more in acquiring new customers, often at higher costs and with policies that may present higher claims frequency, thereby affecting underwriting performance. This dynamic underscores the importance of disciplined underwriting and targeted retention strategies.
Looking ahead, proposed tariffs expected throughout 2025 may further influence consumer behavior, potentially driving accelerated vehicle and home goods purchases. These cross-line effects suggest insurers should monitor shopping trends closely and adjust acquisition and retention tactics to adapt to evolving market conditions. Maintaining underwriting discipline amid heightened competition and shifting customer behavior remains a critical focus for carriers.