Insurance rates are on the rise, but many drivers are taking action to find better deals. A recent study conducted by LexisNexis revealed that over 40 percent of insured drivers have explored new car insurance policies in 2023, marking a nearly 5 percent increase from the previous year. While reduced advertising spending by insurers may have contributed to this trend, the primary motivation for drivers is the desire to save money and secure more comprehensive coverage.
This shift in consumer behavior poses challenges for insurance companies, even those that are acquiring more customers than they are losing. The rise in multi-generational households, where families come together to cut costs, has led to an increase in the number of drivers covered under each policy while decreasing the number of new policies being issued. In addition to potential revenue loss, insurers may overlook risk factors associated with multi-driver households.
As a result of this increased shopping activity, insurers are experiencing a decline in customer renewal rates, with the average rate dropping from 83 percent to 80 percent. Many of the customers switching between coverage options are individuals with clean driving records and low-risk profiles, leaving insurers with a higher proportion of higher-risk drivers to insure. LexisNexis emphasizes the importance for insurers to prioritize pricing and customer satisfaction for lower-risk policyholders to avoid being left with a pool of costly-to-insure drivers.
For those considering switching insurance providers, conducting thorough research beforehand is crucial. Evaluate your current deductible, coverage limits, and benefits to ensure that any potential savings on premiums do not come at the expense of higher deductibles or reduced coverage options. Saving a few dollars on insurance costs may not be beneficial if it means sacrificing adequate coverage in the event of an accident.
