Almost half (47%) of home insurance policyholders saw their premiums rise over the last year, according a study from J.D. Power.
That’s the highest rate of insurer-initiated rate increases in more than a decade, and it can erode customer loyalty, the study found. Among homeowners who experienced a premium increase and say they are unlikely to renew, 43% said the price hike was their reason for switching.
The study also found that customers who experience an insurer-initiated rate increase are less likely to trust their insurer or say they are easy to work with.
High-value customers — policyholders with above-average premiums and multiple insurance products — were more likely to see price increases (49%), which could be risky for insurers. High-value customers were more likely to say they’d switch carriers due to repeated price increases (45%), compared to low lifetime-value customers (30%) who said the same.
“These customers represent the most profitable segment of the property and casualty insurance market, and they are far more likely to take their business to a competitor when they experience repeated rate increases,” said Craig Martin, executive director, global insurance intelligence, at J.D. Power, in a statement.
Proactive communication can help, the study found. Customers said they appreciate when insurers clearly explain the reason for a rate increase and provide options to help them lower their premium.
Among those who experience a rate increase, overall satisfaction averages 721 (out of 1,000) when the increase is explained and options are offered. That’s 184 points higher than the average among customers who don’t understand the increase and aren’t given options.
The slideshow above highlights top home insurance carriers as ranked by Forbes Advisor.
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