Q1 2025 Personal Lines Trends and Perspectives

Property plays catch-up while auto shifts gears

As 2025 began, underwriting fundamentals in auto and property were out of sync: While auto insurance again experienced profitability not seen since 2020, property profitability continued to lag, held back by climate-driven disasters and inadequate rates. But auto insurers face challenges as well, including the need to make better use of consumer data in marketing and contemplate increasing retention efforts while keeping an eye on profitability.

There was good news for carriers looking to boost customer acquisition: Year-over-year shopping was up across personal lines for 2024, with the trend accelerating in the fourth quarter, as seen in Figure 1. But as you’ll see as we dig into the details, auto and property insurance businesses aren’t on the same trajectory.

Let’s take a closer look.

In 2024, we saw steadily increasing shopping rates for auto insurance that trended higher than the previous year and ended 20% above — based on a three-week moving average comparison. In terms of total number of shoppers, 2024 had 11% more shoppers than 2023.

Additionally, TransUnion’s consumer quarterly surveys showed 40% of shoppers switched providers; this figure has remained

consistent for the past year and a half but represents an increase from historical averages closer to 30%.1

The increase in shopping levels was initially attributed to aggressive rate hikes and targeted underwriting actions by carriers in 2022 and 2023. While these measures were necessary to restore pricing and underwriting discipline, they also encouraged — and often forced — customers to look for other options.

Further exacerbating consumer shopping in 2023 and 2024 were insurers’ returns to marketing and acquisition strategies targeting consumers disaffected by the aforementioned profitability activity.

Therefore, auto insurers face the challenge of holding on to current customers while also winning new business. The last industry cycle that saw this level of profitability and marketing spend was pre-COVID-19, and the landscape is very different today.

We’ve seen an increase in marketing channels like connected TV (CTV) and increases in social channel marketing. Generational preferences are also impacting marketing leads and the overall customer journey. Today’s consumers are highly digital, have access to insurance information and expect choice — thus emphasizing the importance of data segmentation for these groups.

The use of digital channels continues to grow to provide marketers better options on aligning customer experiences with those more likely to convert and less likely to have risky characteristics like poor driving records. The most successful insurers will deploy the right data to make the most of these leads.

The replacement cost rollercoaster

One factor that fueled the auto segment’s return to profitability was the stabilization of personal auto repair and replacement costs, which decreased by 0.2% from 2022 to 2023, according to the Insurance Information Institute. And 2024 saw an even larger 1.1% decrease in personal auto replacement costs. Insurance Information Institute is, however, forecasting an annual average increase of 4.0% over the next two years, the first increase since 2022.

Rethinking legacy processes: The power of violation data throughout the policy lifecycle

Driving records are one of the most predictive variables in assessing auto insurance risk; however, due to the high cost of ordering state motor vehicle reports (MVRs), legacy approaches have been limited to new business and renewal underwriting. In addition, existing underwriting processes incorporating state MVRs potentially contain gaps and limitations, such as a reliance on license number for matching and limited insight into out-ofstate violations — both which can limit risk insights.

Traffic court record data, in contrast, can provide a powerful alternative to traditional state MVRs — with benefits that include lower costs and increased violation insight. As a more affordable, and oftentimes more robust, source of driving record information, court records can be affordably deployed across the policy lifecycle to improve the customer experience and deliver a positive ROI.

Insurers can use improved insights from court records across the policy lifecycle:

In marketing and acquisitions, using court records based on driving history enables insurers to efficiently target desired risk profiles across both online and offline channels. This helps improve lead quality, increase customer lifetime value, and optimize marketing spend by focusing on profitable prospects and suppressing low-quality leads. This approach is especially important for gaining a market segmentation advantage when cross-selling high-value, hard-to-obtain property policies.

Court records can be used to verify driving records earlier in the application process at point of quote or new business. In fact, an estimated 11% of drivers had a ratable violation identified by a driving history record where the MVR showed as clean.

Claims adjusters can save on payouts by applying comparative negligence against third parties that had a violation to a submitted claim.

Insurers can deny coverage for non-covered incidents or choose not to renew a policy for a problematic driver.

Additionally, different states have different systems and different laws. Plus, information about driver violations won’t necessarily follow individuals if they move — or commit a violation in a state away from home. Some states are even forbidden by law from sharing certain types of driver violation data with other jurisdictions. To get a better picture of driver safety, insurers need access to state court records. Figure 3 compares the ratable, out-of-state violations found via court records to the number found using MVRs alone.

Homeowners insurance not yet on solid footing

Like auto insurance, personal property insurance saw increased year-over-year shopping levels in the second half of 2024, as shown in Figure 4. That trend started in July and peaked in October when 30-year mortgage rates hit their lowest rate for the year. Another trend where auto and property insurance were in step: The number of shoppers who switched carriers has been stable at roughly 40% since mid-20235; however, this figure represents a boost over historic levels. But that’s where the similarity ended. Homeowners’ profitability continued to lag, sitting at an estimated 104.8% combined ratio for 20246 — a figure that doesn’t reflect the one-two punch of Hurricanes Helene and Milton.

There are several potential explanations for this gap. One is simply the longer policy cycle for property insurance: As most property policy term lengths are a full year (as opposed to six months for auto policies), regulator-approved rate increases can take a full 24 months to be fully realized across a carrier’s portfolio compared to 12 months for auto.

Second, auto insurers reacted more quickly to the changing profit climate. It was only in 2024 that many insurers began raising rates to catch up with the early 2020’s inflation spike. According to J.D. Power’s Home Insurance Study, personal property insurance costs have only now exceeded both the rate of inflation and average rate increase experienced by auto during the past year.

This difference in profitability has encouraged some carriers to double down on marketing bundled insurance offerings, essentially making homeowners insurance a loss leader for more lucrative auto insurance sales. But that leaves them vulnerable to aggressive, monoline carriers — aiming to peel off auto customers and unconcerned about supporting less profitable property lines — that can still provide a property quote through other partners.

The personal cyber coverage bundle

Cybercrime has historically played a larger role for businesses than consumers. However, consumers’ growing reliance on technology and the internet for everyday transactions is causing a rise in personal cybercrime threats. Social engineering, ID theft and cyber bullying were the top three reported losses for personal lines in 2024.

Traditional ID theft coverage typically only covers expense reimbursement and not actual loss funds. Many personal line writers have already started to offer a larger selection of optional personal cyber coverages that include coverage for lost funds from threats like social engineering. There’s an opportunity to bundle personal cyber coverage in lieu of educating consumers on threats and coverage benefits.

Renter insurance market driven by both older and younger consumers

Renter insurance is an increasingly important subset of the personal property line. Figure 5 illustrates year-over-year shopping trends for renter insurance largely correlate with personal property overall.

Beneath the surface, however, some important demographic trends are emerging. As more Millennials (individuals born 1981–1996) transition from renting to homeownership, the renter insurance market is, perhaps unexpectedly, bifurcating between two age groups, Gen Z (individuals born 1997–2012) and Baby Boomers (individuals born 1946 –1964), which each have distinct needs.

As Baby Boomers continue into retirement, many are tapping into a lifetime of equity by selling their homes and renting with their newly available cash as they downsize and simplify their lives. However, these older customers retain many high-value personal assets that may need to be scheduled separately — and potentially need additional coverage for their storage units.

Meanwhile, Gen Z consumers are just entering their independent years and rapidly increasing their share of the rental market, according to New York Times.9 Their policy needs are more basic and thus not as initially lucrative as Boomers, but as the next generation of homeowners, they represent a potential prize for insurers that can cultivate their loyalty.

Insurers must realign their marketing strategies to meet both groups where they are:

Younger customers increasingly prefer digital experiences, while Baby Boomers prefer in-person interaction with agents. That suggests carriers that focus solely on digital strategies as a means of managing expenses may miss the mark with a portion of the consumer market.

Many members of Gen Z possess minimal insurable assets and may not have life or even auto insurance yet; their loyalty is still up for grabs, and they may need education on the value of insurance. By contrast and after several decades, many Baby Boomers are electing to transition from homeownership to renting. It’s important insurers design flexible insurance products that anticipate the more sophisticated insurance needs of Baby Boomers — while also ensuring Gen Z has access to affordable coverage and promoting ways to increase their insurance knowledge.

A look ahead

The picture for 2025 remains uncertain, as insurers’ recovery efforts could be affected by catastrophic weather, as well as changing economic policies of a new presidential administration. The economy will remain front of mind for most consumers, which could have a variety of impacts on the insurance industry: With ongoing, aggressive auto insurance marketing and bankcard debt still above pre-pandemic levels,10 consumers may seek more affordable insurance premiums to keep their budgets in the green. That would lead to a continuation of the elevated shopping and switching numbers seen over the past two years.

Year-over-year vehicle sales have been increasing since Q3 202311 across all credit score groups, which is driving greater insurance shopping — but affordability remains a challenge.

While home purchases have remained flat, and probably will until interest rates drop further, many homeowners are borrowing against their home equity to make upgrades. That boosts home values, but TransUnion’s Annual Outlook Consumer Survey13 has shown only 50% of consumers report such upgrades, which can lead to a coverage mismatch.

For deeper data insights that can help you navigate shifts in the insurance industry, as well as inquiries on how we can specifically benefit your business, contact your TransUnion representative or email us at inssupt@transunion.com.

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