The great Boomer migration from home ownership to renting is upon us. About two-thirds of all rental housing growth between 2004 and 2019 was driven by adults age 55 and older, and that group now accounts for approximately 30% of the total rental market.1 According to the J.D. Power 2021 U.S. Home Insurance Study,SM released today, home insurers have struggled to navigate that transition with products and services designed to maximize customer lifetime value.
"The generational shift from home ownership to renting represents a significant customer retention risk unless insurers figure out a better way to maintain customer loyalty throughout this critical life phase," said Robert M. Lajdziak, senior consultant of insurance intelligence at J.D. Power. "So far, most insurers are missing that mark. Consider the stats: 44% of combined Boomers2 and Pre-Boomers who are renters today had homeowners insurance in the past, but only 52% of them now have their renters policy with the same carrier. Recognizing that annual retention for homeowners is 91.7%, there is a huge opportunity out there for insurers that get the life stage transition formula right, but the scale of this generational movement will likely drive a great deal of switching activity in the future."
Following are some key findings of the 2021 study:
Amica Mutual ranks highest in the homeowners insurance segment, with a score of 854 (on a 1,000-point scale). Automobile Club of Southern California (840) ranks second, while Erie Insurance (835) and State Farm (835) rank third in a tie.
Lemonade ranks highest in the renters insurance segment with a score of 870. State Farm (866) ranks second.
The U.S. Home Insurance Study examines overall customer satisfaction with two distinct personal insurance product lines: homeowners and renters. Satisfaction in the homeowners and renters insurance segments is measured by examining five factors: interaction; policy offerings; price; billing process and policy information; and claims. The study is based on responses from 11,828 homeowners and renters via online interviews conducted from May through July 2021.
For more information about the U.S. Home Insurance Study, visit https://www.jdpower.com/business/insurance/us-home-insurance-study.
To view the online press release, please visit http://www.jdpower.com/pr-id/2021114.
About J.D. Power
J.D. Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, J.D. Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world's leading businesses across major industries rely on J.D. Power to guide their customer-facing strategies.
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1 "Housing Perspectives," Joint Center for Housing Studies of Harvard University, December 17, 2020 https://www.jchs.harvard.edu/blog/ten-insights-about-older-households-2020-state-nations-housing-report
2 J.D. Power defines generational groups as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994); and Gen Z (1995-2004). Millennials (1982-1994) are a subset of Gen Y.