As U.S. homeowners and renters are seeing rising premiums or policy cancellations due to a combination of natural catastrophes and regulatory pressure, the J.D. Power 2023 U.S. Home Insurance Study indicates this new normal presents an opportunity for the carriers that remain.
The caveat: carriers will need to understand how these actions impact customer perceptions.
Overall satisfaction remained flat as rates began to increase, with homeowner satisfaction coming in at 819 (on a 1,000-point scale), which is flat vs. 2022, according to the report.
Renter satisfaction increased one point this year.
Average home insurance filed rate increases have been in the double digits each month since February 2023 and nearly half (48 percent) of homeowners insurance customers affected by a rate filing received a rate increase of 5 percent or more in 2022.
Not surprising, statewide pull-outs can negatively affect customer satisfaction and trust.
The report suggests that insurers that absorb new customers in states where other carriers are exiting have an opportunity to expand their market share, but may struggle to immediately build strong levels of trust and customer satisfaction.
Overall customer satisfaction with homeowners insurance is highest when customers have a tenure of eight years or more, the report stated.
Less-tenured homeowners insurance customers are significantly less satisfied with their overall experience, less likely to renew with their existing carrier and less likely to be an advocate of their existing carrier.
Price was the deciding factor for 57 percent of homeowners who switched carriers in the past year.
Among those who switched insurers within the past year, bundling rates declined 10 percentage points. Bundling auto and home policies is also less prevalent in Florida, California and Louisiana, where large-scale carrier exits have been widespread.
“We’ve all seen the headlines about insurers leaving states like California and Florida where catastrophic weather claims have been at an all-time high, but this pattern is playing out nationwide, affecting thousands of homeowners in every state,” said Breanne Armstrong, director of insurance intelligence at J.D. Power.
“Insurers are reworking their actuarial maps, confronting state regulations that cap rate increases and struggling with profitability,” she added. “For customers, this combination of steadily rising rates and sudden abandonment can create irreparable damage to brand loyalty and perceptions of trust. However, it also creates an opportunity for carriers that can come in and absorb these customers. This could be a real make-or-break moment for many carriers.”
Erie Insurance ranked highest in the homeowners insurance segment, with a score of 856. Amica (844) and Auto-Owners Insurance (834) rounded out the second and third spots.
Erie Insurance also scored highest in the renters insurance segment with a score of 881. American Family (856) took the second spot and InsurTech Lemonade (854) ranked third.
Customer 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 11,221 homeowners and renters via online interviews conducted from May through July 2023.