As baby boomers move from home ownership to renting, only half stay loyal to their insurer, according to a survey by J.D. Power.
Baby boomers are moving from home ownership to renting, and they're not necessarily bringing their insurance with them, according to the J.D. Power 2021 U.S. Home Insurance StudySM.
Two-thirds of all rental housing growth between 2004 and 2019 was driven by adults age 55 and older, according to the Joint Center for Housing Studies of Harvard University. Boomers now account for 30% of the total rental market.
But home insurers have struggled to keep up. Only half of boomers and silent generation members who have transitioned from homeowners to renters policies stay loyal to the same insurer, according to J.D. Power. Among Generation X, the number falls to 44% and for millennials and Generation Z, only 36%.
However, J.D. Power uncovered the key to retaining business as policyholders move from home to rental: service experience. The most common reasons renters remain loyal to their previous homeowners insurance brand were good service experience, brand reputation, bundled products and convenience. Price took fifth on the list.
Those who bundle insurance products with their renters policy are twice as likely to stay loyal to their previous homeowners insurer. And policyholders interacting with insurance agents are the most likely to have their household's bundled products acknowledged. This hints at carriers' legacy systems limiting cross-product visibility.
When it comes to homeowners retention, policyholders who have a strong perception that their insurer is trustworthy are four times more likely to say they “definitely will" renew with the insurer.
One opportunity to build trust and value with customers is smart home technology. Of homeowners with a smart home product installed, such as a doorbell camera or automatic water shutoff valve, 59% say it's helped prevent or lessen property damage. Moving from protection after a loss to prevention of a loss is a big value shift—but the numbers show insurers should be going big if they don't want to be left behind when clients move to renting.
AnneMarie McPherson is IA news editor.