CHICAGO, Feb. 23 2022 (GLOBE NEWSWIRE) — Despite optimism at the start of the quarter, home and auto insurance purchases trended below 2020 levels through the end of 2021. The latest personal insurance purchase report of TransUnion (NYSE: TRU) found Auto insurance purchases fell an average of 12.5%, while home insurance purchases fell an average of 3.4%, over the same period in 2020.
Record high prices for new and used vehicles deterred many consumers from buying a car and, in turn, reduced insurance purchases by up to 16.4% compared to the fourth quarter of 2020. However, the Insurance premiums have continued to rise in response to increasing severity trends. , prompting more consumers to switch carriers, according to a recent report by JD Power.
While the auto insurance market remained muted throughout 2021, the housing market was hot through the end of the year, falling into negative territory for the first time in more than 18 months. However, this change may have been more of a correction, after a very good year.
“Several factors have cooled the real estate market, including the resurgence of COVID-19, as well as rising interest rates and rental prices,” said Mark McElroy, executive vice president and head of insurance business at Trans Union. “It’s always important to keep perspective and understand that buy rates have been elevated well above normal levels throughout the year.”
What does this mean for 2022?
The omicron variant of COVID-19 served as a stark reminder that even short-term events are difficult to predict. Another factor is the increase in severe weather across the country in December. The report also notes that tornado damage pushed the United States beyond its forecast of $105 billion in weather-related losses. The fallout is likely to include generally higher premiums, but also lower marketing budgets, which will reduce consumer engagement, a critical component of sales.
Despite this volatility, some projections can be proposed. For example, auto loans to non-preferred customers are expected to show growth in 2022, but vehicle inventories may impact overall originations.
Additionally, while the housing market has cooled, owners are still likely to profit from their capital gains by selling and downsizing or renting. Millennials will continue to be the most active in migration and home buying. The report notes that within this group, there are more black and Hispanic households than in older generations, and homeownership among young Hispanics is growing particularly rapidly.
“As Millennials mature and have increased earning power, they face unprecedented and unpredictable financial, environmental and social change,” McElroy said. “Insurers should take a partnership approach by meeting people where they are in their current financial situation and offering flexible solutions.”
For additional insights on Personal Lines Insurance Market, the full report can be viewed here.
About TransUnion’s Insurance Purchase Report
The Quarterly Insurance Purchase Report is based entirely on internal TransUnion research. Reported insurance buying trends are based on TransUnion’s report which is derived from TransUnion’s extensive credit database. It includes information on insurance purchase transactions from July 2020 through January 2022. The report focuses on the credit population, highlighting data from TransUnion. It also explores a subset of the total population of insurance buyers. The report excludes data from insurance customers in California, Hawaii and Massachusetts, where credit-based insurance rating information is not used for insurance pricing or underwriting.
About TransUnion (NYSE: TRU)
TransUnion is a global information and knowledge company that enables confidence in the modern economy. We do this by providing an actionable picture of each person so they can be reliably represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call it Information for Good®.
A leading presence in more than 30 countries on five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.