Navigating the Shifting Terrain of Personal Auto and Property Insurance

The dominant story in personal lines is the divergence in profitability between auto and homeowners insurance. While the auto market has steadily recovered from its COVID-19-era low point, the homeowners sector continues to face significant profitability challenges ­­— to the extent some carriers treat homeowners insurance as a loss leader to be bundled with auto insurance. 

New Terrain: Adapting to Shifts in the Personal Insurance Landscape an on-demand webinar from TransUnion^®, lays out the data driving this divergence — and can equip carriers to better navigate today's landscape.

Next, preview some of what you'll learn in the webinar.

A tale of two markets

The key difference between auto and homeowners insurance boils down to how quickly insurers have adjusted their rates — and how well those modifications accommodated economic pressures.

Auto insurers increased premiums above cost drivers like vehicle repair and replacement costs, leading to renewed profitability. Several factors made this possible, including:

• Insurers’ abilities to more swiftly increase premiums through the market — with auto policies renewing every 6 months (as opposed to 12 months for homeowners policies)
• Much of the inflation that struck the auto supply chain in the immediate post-COVID-19 period has now levelled off, giving premiums time to catch up¹

Improved profitability has given rise to a virtuous cycle: Insurers are ramping up customer acquisition efforts, reinforcing recent increases in shopping activity.

By contrast, property insurers are still struggling to hit profitability as rate adjustments lag rising reconstruction costs and labor expenses. Premiums aren't rising fast enough to overcome increases in homeowner costs and construction and repair inputs.²

This segment faces additional challenges, such as:

• Escalating natural disaster costs: 2024 saw a record number of billion-dollar, catastrophic events, putting insurers under immense strain³
• Persistently high reinsurance costs: Property insurers face sustained increases in the cost of risk transfer, limiting profitability⁴
• Shifting housing trends: Consumers are relocating to more affordable housing markets­, but in many cases, these are also areas at greater risk of climate-driven disasters — which exacerbates insurers' exposures⁵

What can insurers do now?

For auto insurers, the challenge is maintaining profitability while scaling growth. One potential tactic along these lines: Using granular data to draw the right high-quality leads.⁶

On the property side, the situation is more difficult, but data can offer help here too. For instance, TransUnion^® analysis has shown multigenerational households are on the rise as more Millennials and Gen Z consumers are living with older relatives than Boomers did at similar points in their lives.⁷ Understanding these changes can help insurers improve their risk segmentation strategies and more effectively target prospects.

For a deeper dive into how insurers can adapt to these evolving market conditions — view the full webinar on demand.