Homeowners and renters have faced insurance rates above the overall rate of inflation in 2024, according to the "2024 U.S. Home Insurance Study" from J.D. Power. Yet, while these rate increases are straining customer satisfaction and resulting in a sharp increase in the percentage of customers shopping for new policies, many are deciding to stay with their current policy.

“The average shopping rate among home insurance customers has climbed to a record high of 6.8% through the second quarter of 2024, up from 5.9% two years ago," said Breanne Armstrong, director of insurance intelligence at J.D. Power.

Thirty-seven percent of home insurance customers who saw their rates increase were likely to shop for a new policy, according to the report. Further, among those customers who saw a rate increase, customer satisfaction dropped to 594 on a 1,000-point scale—92 points lower than among customers who did not receive an insurer-initiated rate increase.

But while a record 6.8% of all home insurance customers are actively shopping for new policies, only 2.2% of homeowners switched policies as a result, down from 2.5% two years ago, the report said. 

“Many shoppers have ended up staying put because there are so few alternatives available, but carriers need to recognize that steady rate increases put policy retention at risk and has a negative effect on customer satisfaction," Armstrong said.

In addition, bundling home and auto products has declined significantly in 2024 compared with 2023, with customers looking to switch auto insurance without switching their home insurance. Specifically, 21% of customers say they “definitely will" also switch their home insurance if they switch their auto insurance, which is down from 24% a year ago.

However, the likelihood that home insurance customers will shop for a new policy following a rate increase is significantly mitigated by clear communication. 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.

During these dynamic times, independent agents can prove their value to their clients and improve retention by conveying the reasons behind rising premiums and what they should expect at renewal time. The Hard Market Toolkit, released by Trusted Choice^® and recently expanded, assists Big “I" member agencies in navigating the current insurance market and helps them effectively communicate with their clients about its complexities.

Meanwhile, there is some good news for the homeowners market. U.S. property insurance rates saw a 0.94% decrease in the second quarter of 2024, the first decrease in almost seven years after insurers returned to profitability amid lower losses tied to catastrophes, according to a property market report from Aon Plc.

“Rate moderation is expected to continue in the current quarter and could persist if losses tied to catastrophes remain low during the last months of the year," said Vincent Flood, U.S. property practice leader, Aon.

Olivia Overman is IA content editor.