Rising Auto Rates Affecting ‘Bundle’ Strategy: J.D. Power
Bundling home and auto insurance may have hit a roadblock as consumers have started to break up policies largely due to increases in auto insurance premiums, according to J.D. Power.
Overall satisfaction and retention rates have been hurt by rising auto premiums as insurers scramble to make up for increases in loss costs due to rising claims frequency and severity.
“Sky-high auto loss costs and resultant auto premium increases are creating ripple effects throughout 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 intelligence at J.D. Power. “Homeowners, and particularly bundlers, have traditionally been less price-motivated than the typical monoline auto customer, but we are beginning to see cracks in that foundation. That puts the focus for insurers squarely on the overall brand experience their customers are receiving—across all lines—and on understanding how changes in one area, such as telematics adoption in an auto policy, can affect the entire customer journey.”
According to the J.D. Power 2022 U.S. Home Insurance Study, overall satisfaction declined 6 points for homeowners and 7 points for renters. Among auto bundlers there was a 10-point decline in price satisfaction, while non-bundlers only see a 1-point decline. The study revealed that about one third of bundlers “definitely will” switch their home insurance carrier if they do the same with their auto insurer.
For the fifth straight year Rhode Island’s Amica Mutual ranked the highest in homeowners insurance satisfaction, according to J.D. Power’s study. The ranking considers customer interaction, policy offerings, price, billing process and policy information, and claims.
J.D. Power noted that 23% of home insurance consumers are aware of insurtech offerings from the likes of Lemonade, Hippo, Kin, Openly, Jetty, and Trove. Of those aware but not yet insured by Lemonade, 34% said they “definitely will” or “probably will” buy from the company if it is available in their state.
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