Home insurers struggle to retain customers as baby boomers flock to rental market, says JD Power

Amica Mutual ranks first in home insurance; Lemonade ranks #1 in renters insurance

TROY, Michigan, September 21, 2021–(BUSINESS WIRE)–The great migration of baby boomers from homeownership to rental is upon us. About two-thirds of all rental housing growth between 2004 and 2019 was driven by adults aged 55 and over, and this group now accounts for about 30% of the total rental market.1 According to the 2021 JD Power U.S. Home Insurance Study,SM released today, home insurers have struggled to navigate this transition with products and services designed to maximize customer lifetime value.

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2021 JD Power US Home Insurance Study (Graphic: Business Wire)

“The generational shift from homeownership to rental poses a significant customer retention risk unless insurers find a better way to retain customers through this critical phase of life,” said declared Robert M. Lajdziak, Senior Insurance Intelligence Consultant at JD Power. “So far, most insurers are missing that target. Consider the stats: 44% of baby boomers combined2 and pre-boomers who are renters today had homeowners insurance in the past, but only 52% of them now have their renter’s policy with the same insurer. Recognizing that annual owner retention is 91.7%, there is a huge opportunity for insurers to get the right life stage transition formula, but the magnitude of this generational movement will likely drive much of the change activity in the future. »

Here are some key findings from the 2021 study:

  • Insurers struggle to switch from landlord policies to tenant policies: Just over half (52%) of baby boomers and pre-boomers combined who transitioned from homeownership to renters remain with the same insurer. This number drops to 44% among Gen X policyholders and 36% among Generation Y and Z policyholders. Compared to the industry average, USAA, State Farm and Amica Mutual have particularly high retention rates because their homeowners insurance customers are switching to tenants insurance customers. .

  • Service experience, not price, is the key to lifetime value: Among renters who stay with their old home insurance brand, the most common reasons for staying with the same insurer are a good service experience, brand reputation, bundled products and convenience. The price is fifth on the list.

  • Bundles build loyalty, but legacy systems often limit visibility across products: Among renters who previously had a homeowners insurance policy, those who bundle insurance products with their renters policy are twice as likely to stay with the same insurer. Policyholders who interact with agents are the most likely to have their household’s bundled products recognized, suggesting that the legacy systems used by many insurers are not designed to allow customers to be treated as a household but rather like a police number.

  • Smart home technologies create opportunities: More than half (59%) of homeowners with a smart home product installed in their home, such as a doorbell camera or automatic water shut-off valve, say having a smart home helped prevent or reduce property damage. This presents a clear opportunity for insurers to increase preventive service offerings, which is a major shift in the value proposition by focusing on loss prevention rather than post-loss protection.

Ranking of studies

Amica Mutual ranks first in the home insurance segment, with a score of 854 (on a scale of 1,000 points). Automobile Club of Southern California (840) ranks second, while Erie Insurance (835) and state farm (835) ranks third in a tie.

Lemonade ranks first in the renters insurance segment with a score of 870. State Farm (866) ranks second.

The US Home Insurance Study examines overall customer satisfaction with two distinct personal lines of insurance products: homeowners and renters. Satisfaction in the home and renters insurance segments is measured by looking at five factors: interaction; policy offers; the price; billing process and policy information; and claims. The study is based on responses from 11,828 landlords and tenants via online interviews conducted from May to July 2021.

For more information on the US Home Insurance Study, visit https://www.jdpower.com/business/insurance/us-home-insurance-study.

To view the press release online, go to http://www.jdpower.com/pr-id/2021114.

About JD Power

JD Power is a global leader in consumer insights, advisory services, data and analytics. A pioneer in using big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been providing incisive industry insights into customer interactions with brands and brands for more than 50 years. products. The world’s leading companies in key industries trust JD Power to guide their customer-facing strategies.

JD Power has offices in North America, Europe and Asia-Pacific. To learn more about the company’s commercial offerings, visit JDPower.com/business. The JD Power Automotive Buying Tool is available at JDPower.com.

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

1 “Housing Perspectives”, Joint Center for Housing Studies at Harvard University, December 17, 2020 https://www.jchs.harvard.edu/blog/ten-insights-about-older-households-2020-state-nations-housing-report
2 JD Power defines generational groups as pre-boomers (born before 1946); Boomers (1946-1964); Generation X (1965-1976); Generation Y (1977-1994); and Generation Z (1995-2004). Generation Y (1982-1994) is a subset of Generation Y.

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Media Relations Contacts
Geno Effler, JD Power; Western coast; 714-621-6224; [email protected]
John Roderick; East Coast; 631-584-2200; [email protected]

Joseph P. Harris