J.D. Power: Rising auto premiums threaten home bundles

The study found retention rates among insurance customers who bundle policies are much higher than those who don't.

Around one-third of policy bundlers surveyed said they will “definitely” switch their home insurer as well if they are driven to change their auto insurer by a price increase. (Credit: bakhtiarzein/Adobe Stock)

Home and auto bundles have been a long-standing staple for insurers when it comes to holding onto customers, but the 2022 U.S. Home Insurance Study from J.D. Power shows rising premiums have driven many former-bundlers to split their policies between insurers in order to save money.

“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,” Robert M. Lajdziak, director, global insurance intelligence at J.D. Power, said in a release. “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.”

Homeowner satisfaction decreased 6 points (on a 1,000 point scale), the study found, and renter satisfaction dropped 7 points over the last year. These decreased scores come alongside a decline in price satisfaction – especially among auto-bundlers. Around one-third of policy bundlers surveyed said they will “definitely” switch their home insurer as well if they are driven to change their auto insurer by a price increase.

A decline in bundling could spell trouble for customer retention, as well. J.D. Power’s report shows the retention rate among those who bundle their home and auto with an insurer is 95%, while it drops to 85% for those who don’t have bundled policies with that insurer.

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