Your auto customers aren't loyal says new study (Gen Z are the worst)

The US auto insurance industry is undergoing a seismic shift, with policy shopping and switching reaching unprecedented levels, according to the latest 2025 US Auto Insurance Trends Report from LexisNexis Risk Solutions.

The report highlights that consumer behavior around auto insurance has dramatically changed over the past year, driven by heightened premium sensitivity, aggressive marketing, and digital convenience. In 2024, both policy shopping and switching surged past all previous records, signaling a more volatile and competitive market landscape for insurers.

Key findings:

• Record-high shopping and switching rates: The volume of consumers shopping for auto insurance policies skyrocketed in 2024, with switching rates—those who not only shopped but also changed carriers—rising in parallel.
• Market reactivity to rate changes: With inflationary pressures and increased claim costs pushing premiums higher, many consumers are responding by actively seeking better rates. This behavior underscores the growing elasticity of demand in the auto insurance space.
• Digital channels drive activity: The ease of comparing quotes and switching policies online has significantly reduced the friction traditionally associated with changing insurers. This has empowered consumers to become more proactive in managing their auto insurance costs.
• Insurers respond with retention strategies: In light of the high churn rates, carriers are doubling down on retention tactics such as loyalty discounts, bundled offerings, and enhanced customer service.

Implications for the industry

The surge in shopping and switching is forcing insurers to reevaluate both pricing and engagement strategies. Carriers that fail to remain competitive on price or that lack seamless digital experiences risk losing market share in an increasingly fluid environment.

“Insurers must embrace advanced analytics and customer-centric innovation to navigate this dynamic market,” the report suggests. “Personalized pricing models, real-time quote adjustments, and digital engagement will be critical differentiators in retaining and acquiring customers.”

With policyholder loyalty dwindling and switching becoming the norm rather than the exception, the US auto insurance market is entering a new era of consumer empowerment. How insurers respond could determine their position in the marketplace for years to come.

Demographic breakdown of auto insurance shopping and switching (2024 data)

Gen Z (Ages ~18–26)

• Most active shoppers: Gen Z leads all age groups in both insurance shopping and switching activity.
• Digital-first behavior: Over 80% of Gen Z insurance shoppers used mobile or online platforms to compare quotes.
• Price sensitivity: Highly responsive to even small premium changes; many switch after just one rate increase.
• Lower loyalty: Show significantly less brand loyalty than older generations; often prioritize cost and convenience.

Millennials (Ages ~27–42)

• High switching rates: Close second to Gen Z in policy switching, often driven by life stage changes (e.g., new homes, families).
• Tech-savvy shoppers: Prefer digital tools for research and purchasing but also value customer service experiences.
• Open to Bundling: More likely to switch insurers when offered attractive bundling options (e.g., home + auto).

Gen X (Ages ~43–58)

• More stable, but increasingly active: Traditionally more loyal, but 2024 saw a notable uptick in shopping behavior.
• Focus on value: Willing to stay with a carrier if the perceived value (coverage + service) offsets price hikes.
• Bundling key to retention: Very responsive to bundled product discounts; bundling is a core strategy for retaining this group.

Baby Boomers (Ages ~59–77)

• Least likely to switch: Boomers remain the most loyal to their insurers, with the lowest switching rates overall.
• Prefer human touch: More likely to shop through agents or call centers than online tools.
• Premium increases tolerated longer: Less reactive to premium hikes, though sharp increases can still trigger shopping.

Other notable segments

High-risk drivers

• High churn rate: More likely to switch insurers frequently, especially after claims or violations.
• Use of aggregators: Frequently rely on quote comparison sites to find affordable options.

Families and multi-car households

• Bundling motivated: Most responsive to multi-car and multi-policy discounts.
• Life event triggers: Shopping often triggered by moves, teenage drivers, or new vehicle purchases.

Urban vs. rural

• Urban consumers: Shop and switch more frequently; often exposed to more aggressive digital advertising.
• Rural consumers: Have lower switching rates and may rely more on local agents, with fewer available insurer options.