The 2025 U.S. Auto Insurance Trends Report, released today by LexisNexis® Risk Solutions, provides valuable insights to help insurers adapt to shifting market trends and make more informed decisions on pricing. The report analyzes data from 2024, covering consumer driving habits, insurance shopping behavior, claim trends, and consumer responses to rate hikes.
Rising Claim Costs and Increasing Violations
The report reveals a continued rise in claims severity. Bodily injury claims rose by 9.2%, while property damage claims increased by 2.5% compared to 2023. Conversely, collision claims saw a slight decline of 2.5%.
Driving violations across the U.S. also saw a significant increase, up 17% from the previous year, surpassing 2019 levels. Major speeding violations rose by 16%, and minor speeding violations climbed by 25%. Additionally, driving under the influence (DUI) incidents grew by 8%, with the biggest jump seen among drivers aged 66-90. However, the majority of DUI violations still come from drivers aged 26-35. Distracted driving violations surged by 50% from 2023 to 2024.
Rate Increases Slow, Profitability Improves
Auto insurance rates have started to ease, rising by 10% in 2024 compared to a 15% increase in 2023. Despite these slower hikes, rates have still increased by 35% since January 2022. This shift comes as the market softens, and insurers see a rebound in profitability. Direct written premiums grew 13.6% in 2024, reaching $359 billion. Insurers’ loss ratios also improved, providing some companies the opportunity to lower rates for the first time in years.
Record-Breaking Policy Shopping and Switching
The rate of policy shopping reached an all-time high in 2024, with over 45% of active policies being compared or switched. Older consumers, particularly those aged 66 and above, showed the greatest increase in shopping behavior, followed by long-tenured customers (those with over 10 years of coverage). This demographic showed a 35% rise in shopping behavior year-over-year, with high-survivability shoppers accounting for 40% by the end of the year.
As consumers continue to shop for better deals, retention rates for insurers have been slipping. From 2021 to 2024, retention dropped by 5 percentage points, leading to a 22% increase in policy churn. This highlights the growing need for insurers to bolster their retention strategies.
New Risks from EV Adoption
The transition to electric vehicles (EVs) is also bringing new challenges. Drivers switching from traditional internal combustion engine (ICE) vehicles to EVs experienced a 14% increase in claim frequency, raising concerns for insurers.
A Shifting Consumer Market
Jeff Batiste, Senior Vice President and General Manager of U.S. Auto and Home Insurance at LexisNexis Risk Solutions, emphasized the evolving nature of the market. “The combination of market softening and returning profitability offers a new chapter for insurers. The consumer base is more willing than ever to shop for deals, presenting an opportunity for insurers who can quickly adapt to these changes.”
As insurers face these challenges, Batiste urged companies to remain agile. “Those who can swiftly analyze shifting trends and adjust pricing models will have a competitive edge, allowing them to better assess risk and navigate the ongoing changes impacting the industry.”
This comprehensive report provides crucial data for insurance carriers, helping them make smarter decisions as they adapt to the changing landscape of U.S. auto insurance.
