Q2 Insurance Personal Lines: The Auto Market Softens as Property Grapples With Natural Disasters
Personal insurance lines continue to tell two different stories: Auto insurance has returned to profitability, and insurers are increasingly focusing on growth and customer acquisition. But homeowner insurance isn't there yet, and carriers will continue to seek premium increases.1 Let's look closer at these trends in the second quarter of 2025.
The Q2 2025 Personal Lines Trends and Perspectives report from TransUnion® draws from exclusive data and market analysis to provide insight on the next steps.
Auto insurance returns to profitability — but a softening market awaits
Shopping in the personal auto market has risen partly due to increased rates — which successfully brought auto insurance premiums back in line with loss costs. We're now seeing a move toward more traditional rate approaches where the greatest premium increases skew to riskier policies: The lowest insurance score segments now lead in auto insurance shopping.2
Overall, the rate of premium increase peaked in 2023,3 and the industry appears to be heading for a soft market in which carriers compete for customers to drive growth. Auto inquiries per shopper per month peaked in 2023 and have since declined,4 which has prompted increased investment in customer acquisition. Year-over-year auto marketing spend with auto as the leading product went up by 35.2% in the fourth quarter of 2024.5
Beyond the bundle
Only 10% of TransUnion survey respondents switched insurers to bundle their auto insurance with a single provider — in comparison to 15% of those shopping for home insurance.6 The surveys reveal lower premiums, better coverage and enhanced customer service dominate switching motivations — and they don't see bundling as the best route to those goals.
Some shoppers are taking more drastic measures: Approximately 13% of respondants7 indicated they’ve gone without auto insurance in the past six months, citing an inability to pay as the primary reason.
High-risk homeowners buck against higher premiums
Homeowners insurance shopping increased an estimated 5% year over year in Q1 2025. Insurers are taking rate increases and enforcing underwriting criteria that target higher risks first, leading higher-risk customers to scramble for lower rates. These customers became the most active shoppers for the first time since the end of 2021.8
But premium hikes still haven't offset the recent inflation-driven increase in replacement costs. Potential rising import costs and record-breaking, weather-related catastrophes10 explain why rates aren't dropping any time soon.
Multigenerational living is a longer-term shift that carriers need to accommodate
With Gen Z and Millennial consumers less likely than their predecessors to own homes at similar ages, two- and even three-generation households are becoming more common.11 Additionally, the average size of a new home has expanded dramatically over the past half century,12 making it possible to accommodate multigenerational households — but difficult for young people to find starter homes. Insurers that revamp products designed for traditional households and develop flexible coverage for multiple generations will gain significant advantage.
A look ahead
Some developments we're tracking as we move into the second half of 2025:
- The auto buying market continues to struggle, with vehicle loan originations below 2019 levels.13
- The 30-year mortgage rate climbed back to 7% at the end of 2024, further limiting mortgage originations. Rising home prices have pushed mortgage balances up, driving home equity lending to near-record levels.15
- Consumers overall are pessimistic: A TransUnion survey found 65% of respondents believe the US is already in a recession or will enter one in 2025.16
Ready to dig deeper? Download the complete Q2 2025 Personal Lines Trends and Perspectives report for detailed insights and analysis.
References
1 “US Department of the Treasury Report: Homeowners Insurance Costs Rising, Availability Declining as Climate-Related Events Take Their Toll,” US Department of the Treasury, January 16, 2025. https://home.treasury.gov/news/press-releases/jy2791.
2, 4 TransUnion internal Shopping data.
3, 7 “Auto Insurance Report,” January 20, 2025.
5 Q4-2024 Insurance Omni Channel Marketing Review, Comperemedia, Q4 2024.
6 Q3-2023 through Q1-2025 Quarterly Insurance Consumer Surveys, TransUnion.
8 TransUnion internal shopping data.
9 FRED data, Federal Reserve Bank of St. Louis. https://fred.stlouisfed.org.
10 “Billion-Dollar Weather and Climate Disasters, Time Series,” National Centers for Environmental Information (NCEI). https://www.ncei.noaa.gov/access/billions/time-series/US/cost.
11 Slide 23–25, New Terrain Presentation, TransUnion.
12 Slide 8, New Terrain Presentation, TransUnion.
13 Slide 32, Credit Industry Insights Report Q4-2024 Webinar, TransUnion.
14 2025 TransUnion Insurance Summit Consumer Survey.
15 Slides 57–62, Credit Industry Insights Report Q4-2024 Webinar, TransUnion.
16 “Consumer Pulse Study, US Q1 2025,” TransUnion. https://www.transunion.com/consumer-pulse-study.
