The U.S. homeowners insurance market commenced 2024 in a state of flux. New policies experienced an average premium increase of 17.4% and homeowners who renewed their insurance in 2024 paid about 69% more, or an extra $865 yearly, according to Matic, an InsurTech platform. By mid-year, the rate of premium rises had started to slow down, with the average rise dropping from 10.7% in the first half of the year to 6.6% in the second half.

As a result, a record 6.8% of all home insurance customers were actively shopping for new policies through the second quarter, according to the "2024 U.S. Home Insurance Study" from J.D. Power. Yet, only 2.2% of homeowners switched policies as a result, down from 2.5% two years ago. Despite increased shopping, the lack of switching was the result of the fewer alternatives available for consumers, the report said. 

Overall, many homeowners experienced a difficult year. Premiums increased, fewer carrier alternatives were available in certain locations—especially areas with heavy catastrophe activity—and many coverage options became limited or simply unavailable.

“Globally, the whole homeowners industry has been impacted by unprecedented CAT losses," says Casey Kempton, president, property & casualty lines, Nationwide. “The recent trends that we're seeing today are abnormal relative to what we have seen in the past. These escalating loss trends span across perils: hurricane, hail, severe convective storm, and wildfire."

Crucially, customers who receive a rate increase and understand the reason for the increase are 14% less likely to shop for a new policy than those who do not understand the reason for the rate increase, according to J.D. Power.

To alleviate the uptick in consumer concerns about the market that leads to an increasing number of clients switching insurers, “helping customers understand the reasons behind rising costs goes a long way," says Steve Hylka, senior vice president of property product state management at Liberty Mutual and Safeco Insurance. “Most people can rationalize what's happening with the weather because it's all over the news. However, not everyone connects the direct impact weather has on insurance costs."

This is where agents can cement their role as trusted advisors for their homeowner clients, save them money and potentially reduce the agency workload of requoting policies.

“Agents can help create understanding through education on why costs are up and what their policy would cover in the event of a catastrophic loss," Hylka says. “For example, the cost to repair or rebuild a home today is much more complex than it was just a few years ago, and flat deductibles don't keep up with inflation. Taking the time to explain percentage deductibles can save a customer 5%-15% annually."

Additionally, agents can explain the impact of other contributory expense factors, such as the reinsurance market, increasing legal costs and social inflation.

“Carriers develop tools and communications whenever they have to take rate or change their position in the market, and it's crucial for agents to stay informed about these changes," Kempton says. “Agents should proactively communicate with their customers to ensure they are well-protected and have access to necessary resources, especially following significant events." 

Further, “regular renewal communication with customers is important to ensure awareness of any changes that may impact coverage needs or present discount opportunities," Kempton says. “As events impact more areas and create unprecedented damage, customers will have more questions and increased clarity about their insurance coverage."

As 2025 continues, “customers will continue to be pushed to evaluate their insurance priorities due to market and carrier restrictions," said Ty Harris, co-founder and CEO of Openly. “This will continue to make the role of the independent agent more valuable as we move through 2025."

Olivia Overman is IA content editor.