Homeowners Shopping Rates Due to Rise in Premiums

According to the recently released J.D. Power 2024 U.S. Home Insurance Study a nationwide rise in premiums has driven many customers to shop for new policies as their rates are now 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 in a recent press release. “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.”

Here are just a few of the major findings that the 2024 study found:

• Rising prices drive have pushed policyholders to shop their policy. It has also led to decreased satisfaction among home insurance customers who receive an increase in premium from their insurer. This resulted in 37% of policyholders shopping for a new policy. 
• The number one reason respondents said they were shopping for new coverage was 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.
• Just because consumers are shopping their coverage doesn’t mean they ultimately end up switching, according to the J.D. Power survey, only 2.2% of homeowners switched which is down from 2.5% two years ago.
• Consumers are not bundling coverages as often as they did in 2023 as many consumers are considering switching their auto insurance but leaving their homeowners insurance with their current insurer. J.D. Power found that 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.

Timely and effective communication can mitigate negative effects of a rate increase. Insurance customers that fully understood the reason the reason for the increase were less likely to shop for a new by 14 percentage points than those that were not clear on the rate increase. 

Insurance Study Rankings

The study ranked a variety of insurance companies, here is how they ranked:

• Chubb ranked the highest in the homeowner’s insurance segment, with a score of 688. AIG grabbed second place with a score of 680 and Amica rounded out the top three at 679. 
• Erie grabbed the top spot when it comes to renters insurance for the second consecutive year, scoring 713. Amica at 695 was second and Lemonade (682) was number three.

The study is based on responses from 14,122 homeowners and renters via online interviews conducted from November 2023 through July 2024.