Surging home and renters insurance rates are eroding customer satisfaction and pushing policyholders to shop for new options, according to J.D. Power’s 2024 U.S. Home Insurance Study.
Home and renters insurance costs have surpassed inflation, the study finds. Car insurance rates have increased as well, though less dramatically, according to J.D. Power’s analysis.
Consumers are feeling the pinch. A record 6.8% reported they were shopping for new policies, yet only 2.2% are actually switching policies.
“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,” Breanne Armstrong, director of insurance intelligence at J.D. Power, said in a 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 have a negative effect on customer satisfaction.”
J.D. Power’s research also found that policy bundling has also declined since last year, as consumers have shown a growing desire to switch their auto policy without changing their home insurance.
Could better communication help?
J.D. Power’s study found that effective communication from insurance companies makes a difference when it comes to retaining customers. Policyholders who understand the reason for a rate increase were 14% less likely to shop for a new policy and 21% more likely to believe the insurer puts its customers’ interests first, according to the study.
Premium increases also significantly affect satisfaction: Ratings were almost 100 points lower among customers who received an increase than for customers who didn’t, according to the study. Chubb earned the highest overall customer satisfaction ranking among home insurance companies in the study. Erie Insurance ranked highest for renters.
What’s next: Comparison shopping may be the key to customer satisfaction
The average cost of home insurance rose by 19.8% from 2021 to 2023, and the average annual rate today is $2,377, according to Insurify’s homeowners insurance report. Insurify projects another 6% increase by the end of 2024, driving the national average to $2,522.
Though few homeowners are actually switching their policies, comparing policies is one of the best ways to save money on premiums, according to the Insurance Information Institute. But many homeowners aren’t even aware of the possible savings.
“Many homeowners buy home insurance when they first take out their mortgage. Then, they rarely revisit it because they pay it through their escrow account,” said Insurify data journalist Cassie Sheets.
“‘Out of sight, out of mind’ is fine when your insurance cost is relatively stable, but homeowners have seen significant rate hikes over the past few years,” Sheets said. “If they haven’t recently compared insurance rates with a few different companies, they could be missing out on a policy that costs hundreds of dollars less per year.”
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Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.