Homeowners Insurance Customers Are Not Happy

Did your homeowners insurance premium go up this year? Mine did. Of course I live just outside of Austin, Texas, where wildfire risk has risen significantly as the state battles ongoing severe drought.

Even with a nearly 25% increase in annual homeowners premium, I was relatively pleased that I didn’t receive a nonrenewal notice as did many homeowners in my neighboring community. While I wasn’t happy to pay more, I do understand why – there are more and more claims driven by catastrophe weather events nationwide.

But after reading many posts on my neighbors’ social media, it was clear that many people had no idea why their insurance premiums rose substantially or why their carrier decided to cancel their coverage after 10, 15, 20 years of no claims.

That lack of knowledge by property owners appears to show in this year’s J.D. Power report on 2024 U.S. Property Claims Satisfaction. With 28 catastrophic weather events in 2023 causing nearly $93 billion in damage, customer service satisfaction plunged to a seven year low, the study found. More extreme weather events led to a larger number of high-severity claims and longer claims settlement times, negatively affecting satisfaction.

The average claims cycle time – the amount of time from reporting the claim to finished repairs – has now reached 23.9 days, over six days longer than in 2022.

For claims related to catastrophic events, that average repair cycle time jumped to 34.2 days.

As a result, customer satisfaction has declined by five points to 869 (on a 1,000-point scale) from a year ago, the study found.

The average overall satisfaction score among customers who experienced catastrophic claims is 841.

“Catastrophic weather events are straining an already fragile system still experiencing supply chain issues that affect the availability and cost of materials,” said Mark Garrett, director of claims intelligence at J.D. Power. “Resources become strained for both insurers and the contractors doing the work. Unfortunately, it’s when claims last beyond three weeks that J.D. Power sees things decline. When claims last less than three weeks, satisfaction improves, so it’s the longer claims that are solely responsible for the decline. Insurers are challenged to manage expectations and proactively communicate during longer claim periods as customers tend to have more questions when experiencing delays.”

Because of rising insurance premiums, when customers have a claim and have to cover $1,500 or more in costs, the study found that satisfaction is negatively affected, even if it is to cover their deductible.

The increasing frequency of catastrophic weather events coupled with policies that often have higher deductibles for this type of weather (wind, hail, named storms, etc.), means more customers will be paying higher deductibles.