A seismic shift is rocking the U.S. auto insurance industry, with customer loyalty plummeting to historic lows, according to the 2025 U.S. Auto Insurance Trends Report from LexisNexis Risk Solutions. The study, released on June 16, 2025, reveals that policy shopping and switching rates soared in 2024, driven by premium sensitivity, aggressive marketing, and digital convenience. Gen Z stands out as the least loyal demographic, reshaping the market with their price-driven, digital-first behavior.
Why Gen Z Is the Least Loyal
The report highlights Gen Z’s distinct approach to auto insurance:
- Frequent Shoppers: Gen Z leads all age groups in both shopping for and switching insurance providers, fueled by their responsiveness to even small premium hikes.
- Digital Natives: Over 80% of Gen Z shoppers use mobile or online platforms to compare quotes, leveraging the ease of digital channels to reduce switching friction.
- Price Over Brand: Unlike older generations, Gen Z prioritizes cost and convenience, showing significantly lower brand loyalty. They’re quick to jump ship for better rates or seamless experiences.
- Market Impact: With switching becoming the norm, the report notes that “consumer empowerment” is redefining the industry, with Gen Z at the forefront of this volatility.
This trend aligns with broader consumer behavior. A 2024 SAP Emarsys Customer Loyalty Index found that 43% of Gen Z have abandoned brands they once liked due to boredom, seeking fresh, personalized experiences. In auto insurance, this translates to a willingness to switch providers for innovative marketing or better pricing.
Industry Challenges and Responses
The surge in switching, particularly among Gen Z, is forcing insurers to rethink strategies:
- Rising Premiums: Inflation and higher claim costs have pushed premiums up, prompting consumers, especially Gen Z, to seek cheaper alternatives.
- Retention Tactics: Insurers are countering with loyalty discounts, bundled offerings, and improved customer service, but these may not resonate with Gen Z’s focus on immediate value.
- Digital Investment: The report emphasizes that insurers must enhance digital experiences, as Gen Z expects seamless, mobile-friendly platforms. Over 80% of their shopping activity occurs online, making digital engagement a critical battleground.
- Personalization Needs: The study suggests advanced analytics and customer-centric innovation are essential to retain Gen Z, who demand tailored pricing and real-time quote adjustments.
A J.D. Power 2025 U.S. Auto Insurance Study echoes these findings, noting that 38% of customers are dissatisfied with their insurers, particularly high-value or loyal ones, due to rising rates. X posts from @LAInsuranceDept amplify this sentiment, highlighting that customers, especially Gen Z, prioritize “good rates” over loyalty.
Broader Context: Gen Z’s Auto Industry Impact
Gen Z’s low loyalty extends beyond insurance to automotive purchases. A 2024 J.D. Power study found that brands like Toyota and Honda retain loyalty through hybrid vehicle availability, but overall brand allegiance is declining as inventory stabilizes. Gen Z’s openness to switching car brands, noted in a Digital Dealer report, further complicates loyalty efforts for dealerships and insurers alike. They value experiences and value alignment over brand reputation, challenging traditional retention models.
X user @GuyDealership declared, “Gen Z is killing brand loyalty in Automotive,” citing data from cars.com, suggesting new entrants could capitalize on this fluidity. However, this claim lacks direct evidence tying Gen Z’s behavior to market opportunities, requiring cautious interpretation.
What’s Next for Insurers?
The LexisNexis report warns that insurers failing to adapt risk losing market share in this “increasingly fluid environment.” For Gen Z, who represent a growing share of consumers, the path to loyalty lies in competitive pricing, authentic digital experiences, and personalized offerings. As the report concludes, “How insurers respond could determine their position in the marketplace for years to come.”
The auto insurance industry must navigate this Gen Z-driven disruption by embracing technology and flexibility—or risk being left behind.
By Business and Consumer Trends Correspondent
Published: June 17, 2025
