Although auto insurance rates in the U.S. have begun to stabilize, drivers are continuing to shop around at record levels, seeking better deals and greater value from their insurers. According to the newly released J.D. Power 2025 U.S. Insurance Shopping Study, the rate of premium increases for auto insurance slowed to below 2% by the end of 2024 — a dramatic decline from the 13% rate spike seen at the start of the year. Yet despite this slowdown, consumers haven’t stopped looking. In fact, 57% of auto insurance customers shopped for new policies in 2024, a significant jump from 49% in 2023.

This 57% figure marks the highest insurance shopping rate ever recorded in the 19-year history of the study. While shopping rates spiked early in 2024 as a direct response to soaring insurance premiums, they remained high even as the rate of increases cooled throughout the year. J.D. Power attributes this persistent activity to a growing consumer awareness of options and a willingness to switch insurers for better prices or service.

“Auto insurance rate taking reached multi-decade highs in the first quarter of 2024, which put record numbers of customers into the market shopping for lower-priced policies as the year progressed,” said Stephen Crewdson, Managing Director of Insurance Business Intelligence at J.D. Power. “As rate activity began to fall in the second half of 2024, many shoppers were successful at finding lower-priced policies. That combination of increased shopping and less rate taking created a bit of a snowball effect for much of the year, but we are seeing signs that shopping rates are starting to normalize.”

Bundling and Customer Retention

An important trend emerging from the study is the role of policy bundling in both cost savings and customer retention. Roughly one-third (33%) of insurance shoppers reported that they were looking to bundle their auto insurance with homeowners or renters insurance to secure better deals. Bundling not only helps consumers save money, but it also appears to benefit insurers, as bundled policyholders stay with their insurers longer — averaging 7 years versus just 5.5 years for non-bundled customers.

Rise of Embedded Insurance

Another developing trend posing both opportunities and challenges for traditional insurers is the rise in consumer interest in embedded insurance — policies offered directly through automobile dealerships, manufacturers, or finance companies. According to the study, 37% of customers expressed interest in buying auto insurance at the point of sale or directly from their vehicle provider. This model offers convenience and simplicity, especially for younger generations.

Interest is particularly high among Gen Y and Gen Z consumers (47%), and among those who cite customer service as their top reason for shopping for new policies (48%). This growing preference for embedded insurance reflects a broader shift in how consumers expect to interact with services — prioritizing seamless, digitally integrated experiences.

Telematics and Usage-Based Insurance Programs

In the search for lower rates, some drivers are turning to Usage-Based Insurance (UBI) programs, which use telematics to monitor driving habits, mileage, and safety to adjust premiums. While 17% of insurers offered UBI options in 2024, this is a slight rise from 15% the previous year but a notable decline from 22% in 2023.

Though UBI can offer significant discounts to safe drivers, its adoption appears to have plateaued. The decline may be due to privacy concerns, lack of awareness, or complexity in usage, suggesting that while interest remains, insurers may need to better communicate the benefits and ease of participation in such programs.

What This Means for the Auto Insurance Industry

The J.D. Power study, which surveyed over 12,720 auto insurance customers who had requested a quote from a competing insurer in the past six months, provides deep insights into evolving consumer behaviors. Conducted from April 2024 to January 2025, the study paints a clear picture of a highly active and discerning insurance customer base.

Key takeaways for insurers include:

• Price sensitivity is still a dominant driver of shopping behavior, even as rates stabilize.

• Customer retention strategies, such as bundling, should be prioritized to reduce churn.

• Embedded insurance and digital distribution channels are gaining popularity, especially among younger, tech-savvy customers.

• UBI programs, though promising in theory, need better positioning and education to regain traction.

As the insurance industry looks ahead to the rest of 2025, understanding and adapting to these shifting dynamics will be crucial. Insurers that invest in personalization, digital engagement, and transparent pricing models will likely emerge as the winners in an increasingly competitive marketplace.