Inflation squeezing the insurance market, TransUnion says


According to a report from TransUnion, inflation is squeezing the insurance market and impacting consumer insurance shopping. 

TransUnion’s “Personal Lines Insurance Trends and Perspectives Quarterly Report” examined trends in the insurance market from April 2021 to October 2022.

According to the report, inflation is “putting the squeeze on insurers” from multiple directions.

Labour and materials for repairs are more expensive, but consumers have less spending power and rebel when faced with rate hikes. As a result, the number of insurance shoppers is declining in both the auto and property market year-on-year.

However, in the third quarter of the year, shopping for auto insurance increased. TransUnion said some of this can be attributed to new vehicle sales on the up, which also brought down used car prices, further boosting insurance shopping.

But another important driver of shopping, according to TransUnion, is auto premium prices. Insurers are raising rates as multiple factors have driven loss costs up, and a return to the office for some is resulting in an increase in time on the road.

According to a TransUnion internal analysis, the ratio of insurance shoppers with an auto loan inquiry in the preceding 30 days continues to decline, averaging roughly one in six quotes, suggesting shopping is due to reasons other than vehicle purchases.

Shopping for property insurance also increased in Q3. TransUnion said that while some of the driving force here comes from real estate sales, another key factor is the same rise in auto rates. This is because many consumers bundle their insurance policies together, a big hike in auto shopping leads some to look for a new insurer for their whole bundle.

Overall, the report concluded that inflation and concerns regarding an imminent recession are changing the ways consumers are spending money, and the insurance industry will inevitably be affected. Rising interest rates, vehicle costs and insurance premiums are all putting affordability into question.

Earlier this year, data from WTW revealed that UK motor claims inflation is on the rise and expected to accelerate further into 2022.

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