In recent years, the cost of property insurance has dramatically increased in some cases, placing a heavy burden on homeowners.
The increase in premiums is due to a perfect storm of factors: more severe weather in multiple parts of the country, supply issues stemming from the initial lockdowns during the COVID pandemic, and increased construction/labor costs. To stay profitable, many insurers have dropped customers in high-risk areas or even pulled out of major markets altogether. This has made it difficult for some homeowners to find insurance online; many brands ask more detailed questions during a shopping funnel and will end the quote early depending on a customer’s location or other factors, resulting in fewer people receiving a quote offer.
Key Takeaway
According to Comscore Custom Digital Data, after a marked increase in quote initiations in the first half of 2023 (potentially due to homeowners searching for more affordable insurance after getting hit with higher premiums), there has been a 22% decline in property quote initiations into the second half of 2023, signaling fewer people are searching for quotes in a difficult environment and fewer still are receiving a price quote. This does not mean everyone failed to get insurance: some insurers will refer a customer to an agent or refer them to a different insurer altogether.
There has been a growing trend in some areas of the country (mostly in Florida) where those who paid off their mortgages or bought their home in all cash are simply forgoing homeowners’ insurance, opting to invest in reinforced roofs, storm windows, and placing money in an emergency fund. Another trend involves those working with agents to be “underinsured” to lower their premiums by making certain parts of their property uninsured (i.e. unattached garage) while still meeting the minimum insurance requirement for their mortgage lender.
Bundling Up
Since customers attempt to save money, insurance companies are offering bundled insurance, which offers a discount if they use the insurer for multiple policies, most commonly auto insurance and homeowners’ insurance. While not new offerings, bundles are prominent in their advertising. The homepages of most major insurance websites advertise bundles front and center, including Progressive and Liberty Mutual.
According to Comscore Custom Digital Data, 47% of homeowners quote initiations were bundled and 54% of quote submissions were bundled in the fourth quarter of 2023. Strong demand forb undled quotes shows desire for deals and simplicity in insurance. Interestingly, drawing in consumers to consider homeowners’ insurance could cause them to explore switching their auto insurance as well.
Customers are eager for value in an expensive insurance market. If a customer chooses a bundle deal with an insurer, it is relatively quick and easy to do online if one has the right requirements. Insurers prominently display how much potential savings can be had in their bundle offers. Even when forgoing a bundle and starting an insurance quote online, many brands will remind customers during the funnel that they still have a chance to bundle and save, providing links to do so.
Circling the Wagons
More detailed funnel experiences have become the norm for many insurers. Whereas many brands like to advertise quick and easy shopping, homeowners’ insurance has become more difficult to obtain which can be seen in insurance funnels: the date of roof replacements, the presence of trampolines on the property, and even the breed of dog that the customer owns is a cause for concern for insurance companies who want to be certain that insuring a property is a smart move financially for them.
Due to wildfires and other events, State Farm recently announced it would not renew policies in California for about 72,000 customers in the summer of 2024. State Farm had already announced that it was no longer issuing new business and personal property policies in the state. If one enters a California zip code on State Farm’s Home and Property Insurance website, they will receive a notice that they are not eligible.
Depending on the zip code, a customer shopping online for State Farm elsewhere may find quoting thorough and time-consuming, which State Farm makes sure to note early. Questions typically not seen early on in a funnel are now asked at the beginning, including the property’s nearest fire protection area.
Knowing that many consumers are unable to complete homeowners’ insurance quotes online and that brands like State Farm are quoting long time-to-completes, we looked at what this has done to quote completion rates. In the Comscore Digital Data, we’ve seen that the percentage of quotes that are successfully completed fell to a low point in the first half of 2023, where only 37% of quote initiators completed their quote. This got slightly better in the second half of 2023, potentially showing an improvement in targeting.
As a result of a longer, stricter funnel and pulling out of a major market, State Farm’s most recent completion rate is lower than previous periods. This does not necessarily mean that every customer visiting the funnel was denied; some may have abandoned the quote midway on their own due to its length, while others may have been referred to an agent or another insurer instead of receiving a quote offer directly from State Farm. As insurers become more selective, consumers may get frustrated at being kicked out of a quote funnel and resort to insurance that is cheaper but does not offer decent coverage, putting their homes at risk.
In Summary
As the homeowners’ insurance market continues to seek balance, we’re watching consumers respond to rising rates by quoting around for alternative coverage. As coverage begins to roll out in more markets, it’s possible offers like bundles with discounts will attract consumers that the insurers want to cover.
Reach out to us to learn more about what we’re monitoring and how consumers are reacting.