Lower Credit Scores Lead To More Insurance Shopping

If you have a lower credit-based insurance score, you’re likely to shop more frequently for auto insurance than those with the highest scores. This new finding comes by way of the Auto Insurance Shopping Index from consumer credit company TransUnion.

The company also discovered that most of the shopping takes place in the spring months, while the holidays (November-December) are the least active period of time.

According to the company’s proprietary database of credit data, which includes more than 430 million auto insurance shopping transactions from 2009 to 2013, most of the shoppers were under 25 years of age with the level of activity leveling off after that point. This is likely due to the higher rates that young people experience. Once said young person turns 25, they generally enjoy their deepest discounts provided that driving and accident records stay clean.

The TransUnion data excludes information from California and Massachusetts, where credit-based insurance scoring information is not used for the rating and underwriting of auto insurance policies.

Gender-wise, young women (aged 25-40) were heavier shoppers up until the age of 40, where participation largely dropped off. Men’s shopping activities stayed fairly consistent even after age 40. This would seem to indicate that men nurture the habit of shopping around more than their female counterparts, who prefer to have their insurance relationships established by mid-life.

 

Displaced Shoppers

Youth isn’t the only attribute indicative of a frequent auto insurance shopper. TransUnion also found that individuals, who were in the process of moving, or had recently changed place of residence, tended to shop heavily. These movers were 200 percent more likely to shop for auto insurance before their move; 130 percent more likely during the month of their move; and 60 percent more likely one month after the move, than their non-moving counterparts.

“More than a billion dollars are spent each year on auto insurance advertising, most of which urges consumers to switch their policies to another carrier,” said Mark McElroy, executive vice president of TransUnion’s insurance business unit, in comments to Insurance Journal. “Our proprietary data is able to track actual trends in new business auto insurance since 2009, improving the industry’s access to strategic information on auto insurance shopping.” http://www.insurancejournal.com/news/national/2014/01/29/318762.htm

 

Shopper Rates

The Index also pointed out a drop in shopping rates for the auto insurance market from 2011 to the present, indicating that consumers are more satisfied with their current providers. Overall rates were down around four percent in the 12 months ending June 2013 compared to the full year of 2012. They were also down seven percent compared to 2011.

“In the competitive auto insurance market, data and analytics can mean the difference between winning and losing, as a result of low retention and adverse selection,” said McElroy, adding that TransUnion’s auto insurance shopping data “can help insurers understand how their company is faring among insurance shoppers.”

 

Other Findings

  • Consumers shopping for auto insurance who receive a quote are three times more likely to shop again the following year compared to policyholders who do not.

  • Around 55 percent of policy-shoppers receive two or more quotes during a one-year period.

  • On average, auto insurance shoppers solicit two quotes (2.04), while 45 percent solicit only one quote.

 

In Summary

The TransUnion data can be an invaluable asset to agents seeking insight into the behavior of their future customers. By studying the trends, agents and companies can know what motivates their customers to shop and to leave their current providers. They can also determine when the best time is to pour in more marketing resources. If you’re hoping to bring in more business in 2014, this data is a great place to start.

Share this Article
Facebooktwittergoogle_pluslinkedinmail
Farmers - The Hartford - State Farm - Kemper Direct - Nationwide - Allstate - New York Life