Rising Auto Insurance Premiums are Killing Home Bundles: J.D. Power

Amica Mutual ranks highest in Homeowners Insurance, Nationwide ranks highest in Renters Insurance in the 2022 U.S. Home Insurance Study by J.D. Power

Troy, MI (Sept. 20, 2022) – The future of the home and auto insurance bundle, once a mainstay of property & casualty insurance customer retention and lifetime value strategies, has come into question as legions of customers have started to break up their polices. According to the J.D. Power 2022 U.S. Home Insurance Study,SM rapidly rising auto insurance premiums are largely to blame for potential defection among bundlers.

“Sky-high auto loss costs and resultant auto premium increases are creating ripple effects throughout the insurance industry and, as a result, one area that is being severely disrupted is the home and auto insurance bundle,” said Robert M. Lajdziak, director, global insurance intelligence at J.D. Power. “Homeowners, and particularly bundlers, have traditionally been less price-motivated than the typical monoline auto customer, but we are beginning to see cracks in that foundation. That puts the focus for insurers squarely on the overall brand experience their customers are receiving—across all lines—and on understanding how changes in one area, such as telematics adoption in an auto policy, can affect the entire customer journey.”

Following are key findings of the 2022 study:

Overall satisfaction declines, led by home and auto bundlers: Overall homeowner satisfaction decreases 6 points (on a 1,000-point scale) and renter satisfaction decreases 7 points this year. The declines among homeowners are driven by a sharp drop in price satisfaction, which is most pronounced among auto bundlers, where customers experience a 10-point decline in price satisfaction, while non-bundlers only see a 1-point decline.
Retention rates significantly lower among non-bundlers: The average homeowners insurance customer retention rate among homeowners who bundle their auto and home policies is 95%. Among non-bundlers, that rate drops to 85%. Similarly, among renters, bundlers have a 95% retention rate and non-bundlers have an 82% retention rate.
Auto premium increases put bundled home policies at risk: Nearly one-third (31%) of bundlers say they “definitely will” switch their home insurer if they switch their auto insurer after an insurer-initiated auto premium increase. Insurer-initiated auto premium increases also negatively affect home insurance intended retention and advocacy, regardless of bundling status.
Insurtech awareness on the rise: Overall, nearly one-fourth (23%) of home insurance customers are aware of insurtech offerings from companies like Lemonade, Hippo, Kin, Openly, Jetty and Trove. Among homeowners not currently insured by Lemonade, but aware of the brand, 34% say they “definitely will” or “probably will” purchase from Lemonade if it is available in their state.
Customer satisfaction with the price of their small business insurance policies rises 3 points this year, despite 30% of small businesses experiencing a premium increase. The study finds that proactive communication plays a big role in that trend. When customers experience an increase—but are notified in advance, discuss ways to mitigate the effect of the increase and completely understand why their premiums increased—they are nearly as satisfied with price as customers who did not have an increase at all.

Study Rankings

Amica Mutual ranks highest in the homeowners insurance segment for a second consecutive year, with a score of 849. American Family (842) ranks second and The Hartford (839) ranks third.

Nationwide ranks highest in the renters insurance segment with a score of 859. Lemonade (853) ranks second and Automobile Club of Southern California (852) ranks third.

The U.S. Home Insurance Study examines overall customer satisfaction with two distinct personal insurance product lines: homeowners and renters. Satisfaction in the homeowners and renters insurance segments is measured by examining five factors: interaction; policy offerings; price; billing process and policy information; and claims. The study is based on responses from 11,630 homeowners and renters via online interviews conducted from May through July 2022.

View the customer satisfaction index rankings in J.D. Power’s press release.

For more information, refer to the J.D. Power 2022 U.S. 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 50 years. The world’s leading businesses across major industries rely on J.D. Power to guide their customer-facing strategies.

J.D. Power is headquartered in Troy, Mich., and 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.

SOURCE: J.D. Power

Tags: home insurance, InsurTech, J.D. Power, rankings, satisfaction, survey, United States (USA)