Travel & Hospitality Intelligence · 2025-03-24 · 13 min
The home insurance market is experiencing a hard market phase analogous to auto insurance two years ago, with premium increases now the dominant narrative. Steve Crutzen and Mark Garrett from J.D. Power present research showing that homeowner premium increase awareness has jumped from roughly one-third (2016-2021) to 52% in the first wave of their 2025 study. The hardest-hit regions are the western north and central plains states, along with Florida, California, and Texas, where extreme weather events - including 28 and 27 record-breaking weather events in consecutive recent years - have driven both rate increases and non-renewals. Claims cycle times have reached historic highs at 44 days average for final payment, with some cases extending beyond the study's nine-month recall window. Simultaneously, customer satisfaction with claims has declined approximately 17 points in heavily impacted states. The research identifies critical gaps: 80% of customers are communicating with insurers through channels they don't prefer, and settlement fairness - not trust - is the primary driver of dissatisfaction in property claims. Both speakers recommend proactive outreach before renewal notices, explaining premium increases and offering coverage options via phone conversations, alongside improved accessibility and responsiveness in claims handling.
52% of homeowners reported a premium increase in the prior year according to J.D. Power's first wave 2025 study, up from 49% in 2024 and roughly 33% annually during 2016-2021.
The western north and western south central regions, including the plains states, Colorado, and states with high exposure like California, Florida, and Texas are experiencing the biggest increases, driven by extreme weather and insurer non-renewal activity.
The average is 44 days for final payment, representing the longest period recorded in J.D. Power's history of the study, with some extreme cases extending beyond nine months.
Settlement fairness and coverage clarity are the top drivers of dissatisfaction, unlike other insurance lines where trust ranks first, because customers are personally invested in understanding what's covered and receiving fair payment.
Insurers should proactively notify customers before renewal, explain specifically why premiums increased, discuss coverage and discount options via phone, and demonstrate accessibility and responsiveness - customers with rate hikes who receive this treatment report equal or higher satisfaction than those without increases.
Computed from the transcript - who did the talking, and the words that came up most.
Rising claims. Delays in cycle times. A surge in severe weather events. Home insurance carriers are facing mounting challenges that are impacting customer satisfaction. How can they turn the tide? Join J.D. Power experts Michael Vermillion, Stephen Crewdson and Mark Garrett as they dive into the state of home insurance today, uncovering key pain points and revealing the strategies carriers need to enhance the customer experience.
Transcribed and scored by The B2B Podcast Index.
Speaker A: Foreign.
Speaker B: Welcome to the J.D. power Insurance Intelligence Podcast. I'm Michael Vermillion with J.D. power, and with me today are Mark Garrett from, uh, J.D. power. Welcome. Mark.
Speaker C: Yep. Hey, Mike, Good to see you again.
Speaker B: Good to talk to you again. And then also Steve Crutzen from JD Power. Welcome. Steve.
Speaker A: Hi, Mike.
Speaker B: Thanks for joining us. Uh, today's, uh, topic is, uh, home insurance. So why don't we, um. It's been in the news, uh, um, between, um, the wildfires in California and then all the hail events in the south and the Midwest, and then. And then, of course, um, the storms we've had in Florida. So a lot of things happening with home insurance. Steve, why don't you kick it off for us in terms of, you know, what's going on overall in terms of the current state of, uh, home insurance?
Speaker A: Yeah, the home insurance market. The story is like what we had in auto a couple years ago, where premium, um, increases were really driving the story around auto insurance. Now that's really the case in home insurance. So if you look at, uh, prior to the recent hard market, if you go back to 2016 through 2021, in our home insurance study, we saw that roughly a third of homeowners told us they had a premium increase in the prior year. And it would vary maybe a couple points a year, but it was really right around a third. Last year in our 24 study, we saw 49% of homeowners told us they had experienced a premium increase from their insurer in the prior year. And this year, in the first wave of our 25 study, that's gone above 50% for the first time, 52% of homeowners told us they had a premium increase in the last year. So again, just like what we saw on auto, um, premium increases are going to be driving the story likely for the next year or two. And it's going to be important for insurers to get out in front of that and communicate well with their customers.
Speaker B: Steve, are we seeing the same picture, uh, across the country, or is it kind of different by state?
Speaker A: It differs a little bit by region. So if you think about the, um, nine, uh, census geographic regions, the western, north and western south, uh, central parts of the US Are really seeing the biggest increases. So, uh, uh, you're really then looking at, um, kind of the Plains states a little bit west of their states, um, that are seeing, uh, the biggest increases. Of course, we know, uh, insurer activity in Florida, California, Texas has been a lot of rate, uh, as well taken there, and also some Non renewals that's been really in the public's eye in especially California and Florida given the wildfires and windstorms in those states respectively. Lots, uh, of non, uh, renewals have caught the attention of the public, the media and of course regulators as well.
Speaker C: Yeah, and I'd echo that Mike, that we're seeing that in our property, uh, claims study that we just uh, released. One of the things we've added just because of these market conditions was asking about rate increases. Now I think to have a perspective on how does that change the way you're entering the claim experience. But just having that data now we see it's corroborated what we're seeing in the his study, Steve references. We've got half our customers reporting premium increases that have had a claim and it's really, you know, concentrated in those central regions. I mean it's a lot, it's a lot of where the claims activity is because that's where a lot of the volatile weather has been. But we've seen some states, you know, you look at Colorado, we see almost 70% of customers in some of those really hard hit states reporting rate increases. And again just to caveat here is that's awareness. You know, I wouldn't be surprised if all these customers had rate increases. But I mean awareness levels that high, like you said, that's kind of unprecedented that we're seeing that much rate, um, you know, coming through and it's, it's impacting the, you know, the customer experience. Absolutely, yeah.
Speaker B: So Mark, how your research is uh, focused on claims experience and claim satisfaction. So how are these uh, rate increases? And I think we're even seeing higher cycle times. Right. So how are these things actually um, impacting customer uh, satisfaction when it comes to claims?
Speaker C: Yeah, yeah, I think it's all interconnected is kind of what we're seeing in our results. So you have this, everything's coming together where you've got this long history now of in the last, I'd say six, seven years of just like extreme, you know, high levels of extreme weather events pretty consistently now. So the last two years have been record breaking years. Right. So we've had 28 events followed by 27 events, the two highest on record for like extreme weather. And a lot of it's happening in those central type, you know it's coming into the Midwest a little bit now. But a lot of those central regions are impacted by this weather. So uh, you can see how it's all connected. That's where a lot of the Damage events is happening. That's where we're seeing the high rate taking happening. Uh, you know, customers saying they're seeing, you know, premium increases at really high levels and then as you expect, that's where we're seeing the process also really slow down. Right. Just you got contractor availability, material availability, you got the insured resources themselves responding to these events. And what we're finding now is this is the longest period we've uh, reported on in terms of the, you know, the history doing the study that it's taken I think 44 days was the average for customer to get that kind of last payment. I mean that's the average. So we know things can take a lot longer. And I'd say even some of the really extreme cases, they probably age out of our study because we try to capture like a nine month recall and we know there's claims out there that take longer than nine months. They'll probably just never qualify for one of our studies because you don't follow your claim and have it resolved in nine months. So you know some of that stuff, uh, the real extreme cases we don't even really gather. Um, so we're really seeing an impact on the consumer things taking much longer. We saw sat go down. Um, you know we don't have direct trending available but we kind of bridged it and we're showing about I think was it a 17 point decline? Um, and the states I'd say that have the most exposure, the most claims in that central region are all on the bottom half of the rank chart. Right. So the brand's hardest hit had a lot of exposures and a lot of claims in those hard hit areas.
Speaker B: So Mark, um, given the increased level of activity, the longer cycle times, the rate increases, um, is all this kind of uncovering any other opportunities for improvement across the carriers? So for example uh, as people are starting to file claims or uh, starting to take a harder look at their policy because of the rate increase, um, do we find that people really actually understand what they're paying for when they buy insurance?
Speaker C: Yeah, I don't know if we're there quite yet that people are understanding their policy. I think it's still, you know, a big issue as see Steve, not in his head. It's still a big issue in our home insurance study. Right. Like you know, educating customers about their policy. We would certainly say from a claim standpoint that's like you know, job number one from a consumer, like understand your policy, know what's, you know, what's, what's covered. What has more limited, maybe partial coverages, know what's excluded on your policy that's going to help to have that stuff reviewed ahead of time as you're entering this process. Um, because we still see the number one issue for problems that customers experience in the claim is settlement issues. Right. What's being covered? Fairness of the settlement is the number one driver in the study. We don't see that in most of our other insurance work. Trust is the top driver. Not in a property claim where there is. Right. A lot less understanding you're there having the work done, you're more likely to get paid. I think customers are more personally kind of invested in this process. So, you know, handling the money and getting, you know, a fair treatment is the top driver. Um, so we see things like if I incur out of pocket expenses or have some kind of partial coverage on stuff, you know, that's creating similar sentiment issues. Right. A lot more, I think, sensitivities, um, and some of that back and forth. But in terms of, to come back to your question, around other kind of opportunities we see uncovered, you know, one thing that we typically message around, you know, the claims, uh, I think kind of satisfaction is just the opportunities around communication still exist and those get exacerbated as these claims take a long time. So the fact that we're seeing the longest repair times, you know, final payment times that we've seen, not a big surprise that, hey, communication and timing perceptions and managing that really becomes, I think, priority number one. I think one of the really interesting things that we highlighted in the press release was we look at what are the most used ways that I'm interacting with the brand. The consumers are talking with their insurance company, getting updates, and we look at here's the top three things they do, and I'll compare it to what they prefer to be doing. And there's just a huge gap, only 18%. Right. Less than one in five people say the things I'm using are what I prefer to be doing right. So think about that. 80% of customers are at least doing one thing they don't want to be doing right. Often it's two things. Sometimes it's all three. Like they're not communicating with me at all how I want to be. So to me, that is something that we've seen in the data and that really, I think puts a, you know, paints a good picture around that's. That's still a big opportunity.
Speaker B: So why don't we, uh, um, start to wrap up this conversation about home Insurance today with kind of a call to action for the, the industry. So, Steve, why don't we start with you? Um, I know we talked about communication, other opportunities. What, what, um, what can the brands be doing better? Uh, here.
Speaker A: Yeah. So very similar to the story again that we saw in auto insurance. Customers are telling us very clearly in our data. Mark, uh, just touched upon understanding their policy. So a customer who understands their policy is more likely to perhaps expect an increase in the environment we're in because they understand how policies work better. And we see in our data that a customer that expected their premium increase is substantially more satisfied than a customer who didn't expect their premium to increase. What insurers can do then is of course, help educate their customers around policy coverages and how insurance works. Beyond that, were they notified of a premium increase prior to receiving a renewal notice or their first bill for that policy period? So did somebody from the insurer reach out and offer an explanation for your premium is going up, here's why, here's what you can do about it. And the why and what you can do about it are really important because you have other data that shows in the home study, a customer who understands why their premium went up is substantially more satisfied. Just along the lines of if they expected it, but even further, if they understood why specifically, why did my premium go up? They're more satisfied. And also if they, um, um, if they feel that they not, uh, just understand, but they were given options. So the discussion that the insurer had, whether it be an agent from the, um, uh, independent agent or captive agent with the insurer or some other representative from the insurer reaching out to have that conversation, did they give the customer options? Perhaps you could change deductibles, change coverages, bundle another policy. Maybe you qualify for discounts you didn't know about. Uh, so that conversation, we typically recommend that being done over the phone. So you can help the understanding, you can help with the options, discuss the options. And across each of those data points, we see when those things happen for a customer, their satisfaction with the insurer is much higher than if they didn't happen. And in fact, you can end up with a customer if you do all those things right. You can end up with a customer that had a premium increase that's just as satisfied or even more satisfied than a customer who didn't have a premium increase.
Speaker B: Thanks, Steve. Mark, um, what's the call to action from your point of view? It sounds like there's some opportunity to kind of do a better job of meeting the customers where they are in terms of their preferred, uh, their channel of choice.
Speaker C: Right, Yeah, I think that's, that's clearly one, I think where, you know, often where we see a lot of variation in the industry is, you know, the points in time, like how are you proactively putting information out to your customers. Right. So what points in time along that claim? Are you either automating messages or having a touch point if it's ah, a coverage more sensitive discussion? You know, Hoffner, you're reaching out to your customers, being available to have those discussions. Um, we see that link to even just the way that they trust how the brand's handling the claim. Right. The way I trust my insurer is often tied to, well, how well are they actually servicing and being available to me. Right. Are they responsive? Are they accessible to me? So yes, it's what, you know, how are you communicating to them? But then it's how are you uh, not just the points in time but also how accessible and responsible are you being as well? I mean those are some low hanging fruits where I think the lowest KPI that we report in the study is, you know, the speed of responding to a phone call. Right. So, you know, big opportunity for the industry there. And I mean just to, you know, to piggyback on Steve's comments too, you know, we do see that a, uh, poorly managed kind of rate increase. Right. Almost puts you in a hole then when you're having these other services experiences. Because what we see in our data is if you isolate those people who had a premium increase, again, you know, half the sample. But you look at them and say, how do I now view my carrier after having this claim? That's kind of one of these new questions we've asked and they're three times as likely to say I have a less favorable impression of my carrier now than the group who, you know, who's saying they didn't have a rate increase. So I mean it just speaks to how important it is to also manage that process as well because then it helps almost get you out of that hole where I'm not having a less favorable impression now I'm using the service.
Speaker B: Well, this is a great conversation today about home insurance. Uh, there's more information about our research on home insurance on our website, uh, @jdpower.com uh, business and the insurance intelligence, um, pages. Uh, but Steve and Mark, thanks so much for taking the time to join us today.
Speaker C: Yeah, thanks again, Mike.
Speaker A: Happy to be here. Thank you.
Speaker B: And we want to thank our uh, listeners as well, and we'll see you next time.
