Home insurers are facing customer loyalty challenges as boomers flock to the rental market, according to a new study from J.D. Power.
About two-thirds of all rental housing growth between 2004 and 2019 was driven by people age 55 and older. That group now accounts for about 30% of the rental market. According to J.D. Power’s 2021 U.S. Home Insurance Study, home insurers have faced difficulty navigating that transition.
“The generational shift from homeownership 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 boomers 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.”
Key findings of the study include:
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Study rankings
Amica Mutual ranked highest in customer satisfaction in the study’s homeowners insurance segment with a score of 854 on a 1,000-point scale. Automobile Club of Southern California placed second with 840 points, while Erie Insurance and State Farm tied for third with 835 points.
Lemonade ranked highest in the renters insurance segment with a score of 870. State Farm took second place with a score of 866.