Home insurance costs surpass inflation, leading to record shopping rates

Home insurance costs surpass inflation, leading to record shopping rates – JD Power | Insurance Business America

Property

Home insurance costs surpass inflation, leading to record shopping rates – JD Power

Few customers, however, are switching insurers

Property

By
Kenneth Araullo

Homeowners and renters insurance costs have now surpassed both the rate of inflation and the average increases seen in auto insurance over the past year, according to the JD Power 2024 US Home Insurance Study.

According to the report, the rising rates have led to a significant increase in the number of customers shopping for new policies due to the high costs.

“The average shopping rate among home insurance customers reached a record 6.8% in the second quarter of 2024, up from 5.9% two years ago,” said Breanne Armstrong (pictured above), director of insurance intelligence at JD Power.

Armstrong added that while many customers are exploring alternatives, a lack of options has caused many to stay with their current provider. However, steady rate increases could affect policy retention and customer satisfaction.

Among customers who experienced insurer-initiated rate hikes, 37% are likely to shop for new policies. The top reason cited for shopping is high rates. Customer satisfaction among those who received a rate increase is 594 on a 1,000-point scale, 92 points lower than among those who did not receive a rate hike.

While 6.8% of all home insurance customers are actively looking for new policies, only 2.2% actually switched insurers, down from 2.5% two years ago.

Bundling home and auto policies has decreased in 2024 compared to the previous year. However, more customers are considering switching auto insurance without changing their home insurance. A fifth (21%) of customers also said they “definitely will” switch their home insurance if they switch auto insurance, down from 24% in 2023.

Clear communication from insurers can mitigate the impact of rate increases. Customers who fully understand the reason behind a rate increase are 14 percentage points less likely to shop for a new policy. They are also 21 percentage points more likely to agree that their insurer puts customer interests first.

JD Power homeowners insurance ranking

Chubb ranked highest in the homeowners insurance segment, with a score of 688, followed by AIG (680) and Amica (679).

Erie Insurance ranked highest in the renters insurance segment for the second consecutive year, scoring 713. Amica (695) and Lemonade (682) rounded out the top three.

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