The rising cost of car insurance has prompted vehicle owners to take matters into their own hands. A recent study conducted by LexisNexis revealed that more people are actively shopping around for car insurance, seeking better coverage options and ways to save money. In fact, over 40 percent of insured drivers surveyed in 2023 had explored new policies, representing a nearly 5 percent increase from the previous year.
While reduced advertising expenditures by insurers may have contributed to this trend, the primary catalyst behind the surge in customer mobility is the desire to cut costs. People are no longer willing to settle for subpar insurance when they can find a better deal elsewhere. This proactive approach to saving money has presented a challenge for insurance companies, even for those gaining new customers.
One significant factor that has led to this shift is the rise of multi-generational households. To cope with financial strain, families are moving in together, resulting in an increased number of drivers on a single policy and a decrease in the number of new policies being issued. While this may seem like a positive development for insurers, they now face the potential risk of overlooking valuable information about the individuals within these multi-driver households.
As a consequence of this widespread shopping around, insurers have experienced a decline in customer renewal rates. On average, renewals dropped from 83 percent to 80 percent. Interestingly, it is the customers with clean driving records and low-risk profiles who are more likely to switch providers. This leaves insurers with a pool of higher-risk drivers and the associated increased costs of insuring them. To prevent such a scenario, LexisNexis advises insurance companies to prioritize pricing and satisfaction for lower-risk vehicle owners, ensuring they don’t end up with a disproportionately expensive-to-insure customer base.
If you are contemplating changing insurance companies, it is crucial to conduct thorough research before making any decisions. While saving a few dollars on premiums may seem tempting, it is essential to consider the potential trade-offs. Review your current deductible, coverage limits, and benefits to ensure that switching providers won’t leave you with a higher deductible or reduced coverage options. Saving money on insurance premiums should not come at the expense of inadequate protection in the event of an accident.