Rising automatic rates affect ‘bundle’ strategy: JD Power

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Bundling home and auto insurance may have been a roadblock as consumers have begun to break up policies, largely due to increases in auto insurance premiums, according to JD Power.

Overall satisfaction and retention rates have been hurt by rising auto premiums as insurers struggle to make up for the increase in loss costs resulting from the increasing frequency and severity of claims.

“The skyrocketing cost of auto damage and consequent increases in auto premiums are driving ripples in the insurance industry, and as a result, one area that is being severely disrupted is the home and auto insurance bundle,” said Robert M. Lajdziak, director, global insurance information at JD Power. “Homeowners, and bundlers in particular, have historically been less price-motivated than the typical monoline auto customer, but we’re starting to see cracks in that foundation. That puts the focus for insurers entirely on the overall brand experience their customers receive — across all lines. – and on understanding how changes in one area, such as the adoption of telematics in a car policy, can affect the entire customer journey.”

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According to the JD Power 2022 US Home Insurance Study, overall satisfaction fell 6 points for homeowners and 7 points for renters. There was a 10-point drop in price satisfaction among car bundlers, while non-bundlers saw only a 1-point drop. The survey found that about a third of bundlers will “definitely” switch home insurance companies if they do the same with their auto insurer.

For the fifth year in a row, Amica Mutual of Rhode Island ranked highest in homeowners satisfaction with insurance, according to JD Power’s study. The ranking takes into account customer interaction, policy offers, price, billing process and policy information, and claims.

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JD Power noted that 23% of home insurance consumers are aware of insurtech offerings from companies like Lemonade, Hippo, Kin, Openly, Jetty and Trove. Of those who are aware but not yet insured by Lemonade, 34% said they will “definitely” or “probably” buy from the company if it is available in their state.

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