What Consumer Credit Data Reveals About Auto Insurance Shoppers

Customers with lower credit-based insurance scores shop most frequently while consumers with the highest insurance scores are less likely than the general population to shop for new auto insurance.

Also, according to the Auto Insurance Shopping Index by consumer credit company TransUnion, the spring months are the most active for auto insurance shopping, while the holiday period around December is the least active time.

TransUnion said its proprietary database of credit data reveals the characteristics of auto insurance shoppers and what motivates them to shop. The company said the database includes information on more than 430 million auto insurance shopping transactions from 2009 to 2013. The index excludes data from California and Massachusetts, where credit-based insurance scoring information is not used for auto insurance rating or underwriting.

The study includes online as well as in-person transactions for which TransUnion receives a request for an insurance score on a new auto insurance policy.

Among other characteristics, the data show that younger people tend to shop for auto insurance more frequently, and auto insurance shopping peaks at age 25 for both men and women.

Younger women (ages 25-40) are more active auto insurance shoppers than younger men, but that trend reverses at mid-life. After age 40, the percentage of women who shop for new policies declines, while the shopping rate among men stays relatively stable.

While auto insurance shoppers tend to be younger, those who are in the process of, or have recently changed their place of residence also tend to be heavy shoppers. Compared to non-movers, consumers who move residences are 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.

“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. “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.”

The rates of shopping for auto insurance are down about 4 percent in the 12 months ending June 2013 relative to the full year of 2012 and down about 7 percent relative to a year earlier. While 15.1 percent of the credit-active population shopped for new auto insurance policies in the 12 months ending June 2013, this was down from 15.7 percent for the full 2012 year and 16.2 percent for the 12 months ending June 2012.

“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 Mark McElroy, executive vice president of TransUnion’s insurance business unit.

He said TransUnion’s auto insurance shopping data can help insurers understand how their company is faring among insurance shoppers. Among other things, the data can tell insurance companies if their customers are shopping more than the general market, which customers are quoting most often and when they are likely to shop.

Other findings by TransUnion:

• Consumers who shop for insurance and receive a quote are three times more likely to shop again the following year than policyholders who did not receive a quote.
• More than half (55 percent) of policyholders who shop receive two or more quotes in an annual period.
• On average, auto insurance shoppers solicit two quotes (2.04); nearly half (45 percent) of auto insurance shoppers solicit only one quote.