JD Power: Home insurance shopping on the rise, rates ‘too high’

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

The average purchase rate of home insurance customers hit a record high of nearly 7 percent in the second quarter of 2024, up from about 6 percent two years ago. Bundled home and auto policies have declined significantly, according to the study, although 21 percent of customers say they would “definitely” switch home insurance if they also switch auto policies.

Despite high purchase rates, JD Power also notes that only 2.2% of customers have actually changed policies, which is down from 2.5% just two years ago. However, effective communication efforts can help cushion customers from switching carriers, according to Armstrong.

“While experiencing insurer-initiated premium increases can be an extremely frustrating experience, insurers can help offset this negative impact by ensuring customers fully understand the reason for the increase. This typically means providing a reason for the increase, setting expectations for the increases and providing advanced notice of the increase,” said Breanne Armstrong, director of insurance information at JD Power.

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

“Even how carriers inform their customers about the increase can affect understanding, as customers who are notified of the increase through their preferred contact method understand the reason for the increase more than those who do not receive notification through their preferred method. I can relate to that because I tend to just ignore items that I get in the mail and sometimes by email because that’s not my preferred way of interacting with my insurer,” Armstrong explained. “But, if I received a text notification or direct communication from an agent or customer service representative, I would probably pay more attention to the message.”