Survey: Homeowners Abandon Longtime Carriers

J.D. Power's "National Homeowners Insurance Study" found that a record number of long-term homeowners indicate they shopped for a new insurer in the last year

In the past 12 months, the rate of shopping has grown 22 percent among those customers who have owned their home for 20 years or more, reported Jeremy Bowler, J.D. Power's insurance practice director.

"These are typically the customers an insurer considers their most loyal and profitable," he said. "While shopping has increased significantly in the auto insurance industry, similar premium hikes don't appear to have driven consumers to shop for homeowners insurance in the same way."

Instead, Mr. Bowler said, it appears that those consumers whose increasing property values have caused their homes to become significantly underinsured may have experienced more substantial premium increases, prompting their rate of shopping.

Mr. Bowler said when his company asks why consumers have sought another carrier, "the single biggest reason is bundling [multiple policies], and the second is value or good rate."

To prevent customers from straying "the idea of going proactive is one of the practices we're advocating to the marketplace," he said. Mr. Bowler said that for customers who are contacted by their companies to check on their needs "the level of satisfaction is much higher.

From a customer's point of view, he said, when a company reaches out, "it clearly has an impact on my sense of relationship. You're interested in my circumstances rather than the bottom line."

He noted that 65 percent of insurance customers in deciding on their coverage go on the recommendation of the carrier or agent. The challenge for carriers, said Mr. Bowler "is to communicate."

J.D. Power said customers report spending a median of $600 annually in home insurance premiums in 2004–up from $580 in 2003 and $452 in 2001, -an increase of 33 percent during the past three years.

The firm's customer satisfaction index reveals that customer experience is driven by five factors (in order of importance):

? Interaction with the provider.

? Policy offerings and initiation.

? Billing.

? Cost.

? Claims.

The study found that while only a fraction of consumers filed a recent claim, those who have done so tend to be significantly more satisfied with their carriers than those who have not filed a claim.

"Until a customer files a claim, an insurance policy is really just a promise," said Mr. Bowler. "Only those customers who have seen that promise honored can truly appreciate the value they receive in return for their annual premium."

Among home insurance providers, Amica Mutual ranked highest in overall homeowners insurance customer satisfaction for the third consecutive year, followed by State Farm. Erie Insurance Group, Automobile Club of Southern California and Nationwide round out the top five.

USAA achieved a higher satisfaction score than Amica, but is not included in the ranking since it is an insurance provider only open to the U.S. military community and their families.

The "2004 National Homeowners Insurance Study" is based on 12,335 responses from homeowners insurance policyholders. A more detailed listing of the results by insurance provider is available at the J.D. Power Consumer Center at www.jdpower.com