J.D. Power: Home insurance shopping is increasing, rates are "too high"

Customers are shopping for new home insurance policies because rates are too high, according to the J.D. Power 2024 Home Insurance Study. The study reveals that 37% of homeowners who receive premium increases from their insurers are likely to shop for a new policy, and high rates are the top reason customers give for shopping policies with new carriers.

The average shopping rate of home insurance customers reached a record high of nearly 7% in the second quarter of 2024, which is up from about 6% two years ago. Bundled home and auto policies declined significantly, according to the study, though 21% of customers respond that they “definitely will” switch their home insurance if they also switch auto policies.

Despite the high shopping rates, J.D. Power also notes that only 2.2% of customers actually switched policies, which is down from 2.5% just two years ago. However, effective communication efforts can help mitigate customers from switching carriers, according to Armstrong. 

“Although experiencing insurer-initiated premium increases can be a highly dissatisfying experience, insurers can help offset this negative impact by ensuring customers completely understand the reason for the increase. That typically means providing a reason for the increase, setting expectations about the increases, and providing advanced notification about the increase,” said Breanne Armstrong, director of insurance intelligence at J.D. Power.

The method of communication and personal preferences are important as well, according to Armstrong.

“Even how carriers inform their customers about the increase can impact understanding, as customers who are notified of the increase via their preferred contact method understand the reason for the increase more than those who don’t receive the notification via their preferred method. I can relate to this, as I tend to only skim items I get in the mail, and sometimes in my email too, because this is not my preferred way to interact with my insurer,” Armstrong explained. “But, if I were to receive a text notification or direct outreach from an agent or customer service representative, I’d likely pay closer attention to the message.”