Insurtech Zego found that searches for cheaper car insurance increased by 125% over the year to August 2023. Against this backdrop, Admiral Group noted during its August 2023 earnings call that it will continue to increase motor insurance premiums and expects the market to follow suit with hikes.
GlobalData’s 2022 Insurance Consumer Survey found that only 21.7% of consumers who renewed motor insurance policies did not shop around at renewal. The same survey also notes that 46.6% shopped around but ultimately renewed, while 28.8% switched insurers (the remaining 2.9% were buying motor insurance for the first time). This survey was conducted in Q3 2022; the subsequent increase in premium inflation and searching around (according to Zego) suggests that significantly fewer than 21.7% of consumers will automatically renew their motor insurance in 2023.
Customers switching to find cheaper policies is extremely common in the motor segment. 80.6% of those who switched in 2022 did so because a lower premium was offered by their new provider as per GlobalData’s survey. Despite this, the market is yet to see large-scale coverage adjustments due to the cost of living. The same survey found that only 7.3% of policyholders reduced their level of cover in 2022. A further 10.3% considered making such a change but did not carry it out. These proportions are likely to rise significantly as the cost-of-living crisis continues and motor insurance premiums keep increasing sharply. Customers also have the option to increase or decrease the excess on policies, but only 7.7% reduced it and 3.4% increased it in 2022.
Consumer finances continue to be stretched to the limit. Even as inflation is falling in some key areas, it is continuing to rise sharply in the motor insurance space. This product has always been a grudge purchase due to its compulsory nature. This leads to consumers prioritising value, which is evident in the success of price comparison sites. The current climate will see consumers more actively searching for the cheapest (and possibly most stripped-down) policies to avoid seeing substantial annual premium increases.