Americans are looking for more insurance as costs rise

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(Bloomberg) — Americans are looking to change their insurance coverage more often than in the past after rising premiums squeezed household budgets, a new industry report shows.

For auto insurance, so-called policy purchase rates — essentially the share of people with insurance who sought quotes from a provider — rose an average of 16 percent from a year earlier in the second quarter of 2024, according to LexisNexis Risk Solutions, a clearinghouse. home for insurance data with access to over 95% of the auto policy market. The figure climbed even higher in July, surpassing 30%.

The search for money-saving alternatives reflects a rapid rise in insurance premiums in recent years, driven in part by the rising cost of auto parts and repairs. While the overall cost of living has risen by around 20% since the start of the pandemic in 2020, car insurance bills have risen by almost 50%.

Pricing is “absolutely” driving shopping activity in the market right now, Chris Rice, a director at LexisNexis, said in an interview. That’s a change from past patterns, when it was usually some kind of life event like moving, buying a new car or adding a teenager to a policy that prompted consumers to shop around for insurance, he said. .

It’s not just the auto policy market that has experienced a major change. Buyers of home insurance have been hit by rising costs and also by changes in coverage that have caused providers to drop some customers.

In California, for example, more than 50 percent of homeowners said they or the area where they live saw an increase in insurance prices from a year earlier, according to a Redfin survey in the spring. In Florida, the rate was even higher at 70 percent, while 12 percent of respondents reported being dropped by their insurance company.

One reason may be the growing threat posed by extreme weather and other climate-related risks.

“Rising insurance costs and natural disasters are causing some people to move,” according to Redfin study. It found that Floridians planning to move in the next year were twice as likely as Americans overall to cite higher insurance prices as a reason.

Rice said recent increases in insurance premiums are “unprecedented” for the industry. He said LexisNexis data shows middle-aged and older Americans are more likely to buy alternative policies, potentially a sign of financial stress among those age cohorts.

“We’ve certainly seen a marked increase among seniors,” which “outpaces the other age profiles,” he said.