TROY, Mich.--(BUSINESS WIRE)--Homeowners and renters insurance costs have now exceeded both the rate of inflation1 and the average rate increases experienced by auto insurance customers during the past year. According to the J.D. Power 2024 U.S. Home Insurance Study,℠ released today, that nationwide surge in rates has driven a sharp increase in the percentage of customers shopping for new policies because their rates are too high.
“The average shopping rate among home insurance customers has climbed to a record high of 6.8% through the second quarter of 2024, up from 5.9% two years ago,” said Breanne Armstrong, director of insurance intelligence at J.D. Power. “Many shoppers have ended up staying put because there are so few alternatives available, but carriers need to recognize that steady rate increases put policy retention at risk and has a negative effect on customer satisfaction.”
Following are some key findings of the 2024 study:
- Rising prices drive increased shopping, decreased satisfaction: Among home insurance customers who receive an insurer-initiated rate increase, 37% are likely to shop for a new policy. The top reason given among those actively shopping new home insurance carriers is high rates. Overall satisfaction among customers who receive an insurer-initiated rate increase is 594 (on a 1,000-point scale), which is 92 points lower than among those who did not receive an insurer-initiate rate increase.
- Shopping does not always result in switching: While a record 6.8% of all home insurance customers are actively shopping for new polices, just 2.2% of homeowners switched policies as a result, down from 2.5% two years ago.
- Bundling declines as intent to unbundle increases: Bundling home and auto policies has declined significantly in 2024 compared with 2023, but there is growing intent to switch auto insurance without switching home insurance. Specifically, 21% of customers say they “definitely will” also switch their home insurance if they switch their auto insurance, which is down from 24% a year ago.
- Effective communication can mitigate negative effects: The likelihood that home insurance customers will shop for a new policy following an insurer-initiated rate increase is severely mitigated by clear communication from their insurer. Among customers who receive an insurer-initiated rate increase, those who completely understand the reason for the increase are 14 percentage points less likely to shop for a new policy than those who do not understand the reason for the rate increase. Customers who completely understand the reason for the rate increase are also 21 percentage points more likely to strongly agree that their insurer puts the interests of its customers first.
Study Rankings
Chubb ranks highest in the homeowners insurance segment, with a score of 688. AIG (680) ranks second and Amica (679) ranks third.
Erie Insurance ranks highest in the renters insurance segment for a second consecutive year, with a score of 713. Amica (695) ranks second and Lemonade (682) ranks third.
See the rank chart for each segment at http://www.jdpower.com/pr-id/2024103.
The U.S. Home Insurance Study was redesigned for 2024. The study examines overall customer satisfaction with two distinct personal insurance product lines: homeowners and renters. Satisfaction in both segments is measured across seven core dimensions: trust; price for coverage; people; digital channels; problem resolution; product/coverage offering; and ease of doing business. The study is based on responses from 14,122 homeowners and renters via online interviews conducted from November 2023 through July 2024.
For more information about the U.S. Home Insurance Study, visit https://www.jdpower.com/business/insurance/us-home-insurance-study.
About J.D. Power
J.D. Power is a global leader in consumer insights, advisory services, and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, J.D. Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 55 years. The world's leading businesses across major industries rely on J.D. Power to guide their customer-facing strategies.
J.D. Power has offices in North America, Europe and Asia Pacific. To learn more about the company's business offerings, visit JDPower.com/business. The J.D. Power auto-shopping tool can be found at JDPower.com.
About J.D. Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info
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1 Bureau of Labor Statistics, Federal Reserve Economic Data, and J.D. Power analysis
