LexisNexis Risk Solutions Releases New Study on U.S. Homeowner Insurance Preferences and Behaviors

09/26/2024

ATLANTA — Today, LexisNexis® Risk Solutions announced its U.S. Home Insurance Consumer Insights report, a new study that reveals a gap between homeowners' understanding of their insurance coverage, the actual risks their properties face and their willingness to provide data to help ensure proper coverage. The consumer study highlights homeowners’ reliance on insurance carriers or agents to help ensure they have adequate coverage while also identifying two distinct cohorts of policyholders: those with a “Set It & Forget It” mindset or those who are “Insurance Involved.”

By gaining a deeper understanding of each group’s motivations to develop more effective engagement strategies and by leveraging emerging technologies to better assist with risk assessment, home insurers can bridge these gaps with consumers and address profitability challenges faced by the industry.

Key takeaways

• Homeowners value insurance and are willing to pay more: 72% of homeowners are willing to pay higher premiums to help ensure they are fully covered.
• Renewals drive shopping behavior: One-third of homeowners shop for home insurance regularly and most often at renewal. If they do not shop regularly, price and competitive offers can move consumers to act.
• Two distinct consumer segments emerged, Set It & Forget It and Insurance Involved: Homeowners with the Set It & Forget It mindset (47%) are less engaged with their policies. In contrast, Insurance Involved homeowners (37%) are more engaged but can drive higher operational costs for carriers.
• Over half of respondents (59%) are highly concerned about using their home insurance but only half (51%) know the specific details of their policy and the coverage. Industry analysis suggests many may be underinsured¹.
• Nearly eight out of 10 homeowners assume some or all responsibility for collecting or providing information about their home at application and renewal, however 70% of homeowners rely on a carrier or agent to make sure they have the right type and amount of coverage.
• Emerging technologies like consumer-led methods for visual home inspections using a mobile device can bridge the gap between consumer knowledge and insurer profitability: 61% of homeowners believe assessing risk through their actual home’s condition via a consumer-led inspection is a fair and accurate way to determine insurance rates—almost double the number who find it acceptable to use similar homes, such as neighbors’ properties, to compare risk.

"Our new home insurance research underscores a growing expectation among homeowners for insurers to help provide adequate coverage while also helping these insureds address their own knowledge gaps about their homes’ potential risks,” said Cole Winans, vice president and general manager, home insurance, LexisNexis Risk Solutions. "Insurance carriers have an opportunity to proactively engage with homeowners, especially those with the Set It & Forget It mentality, to ensure they are adequately covered and informed of the ever-evolving risks that are present in the home insurance market. It is becoming more necessary than ever for carriers to adopt a consultative mindset with consumers who might be looking to shop based simply on higher premiums. Our research indicates that consumers in both cohorts studied are often willing to pay more to cover unforeseen risks.”

Opposing Mindsets Require Tailored Approaches
Set It & Forget It homeowners self-identify as being less knowledgeable about policy specifics, which can result in homeowners being surprised when additional hidden risks are uncovered, particularly at renewal. Conversely, Insurance Involved homeowners say they are more proactive, often engaging with separate home and auto insurance providers and having a better understanding of their policy.

Carriers that understand the different attitudes and behaviors of these two customer segments can better address the challenges related to their unique needs such as:

• Homeowners with the Insurance Involved mindset feel more knowledgeable about insurance; however, increased engagement can lead to higher service costs for carriers, which they will need to address operationally.
• Homeowners with the Set it & Forget It mindset are more distanced from their home insurance. Fewer than half of homeowners are highly concerned with needing to use home insurance (48%) and a little over a third know the specifics of their policy and coverage (37%).
• Of respondents representing both segments, 61% always feel home insurance is worth the money they pay and 59% are highly concerned about having a situation where they would need to use their home insurance.

The Disconnect Between Coverage and Awareness
The report also underscores a fundamental disconnect that while most homeowners assume they have sufficient coverage, their actual understanding of policy details and potential risks remains limited. Homeowners who rely more on their carriers or agents for information tend to be less aware of property risks, with only 31% considering themselves as highly informed. Despite the perception of insurance value, 53% of all respondents believe they have coverage for minor and major events, while 47% believe they only have coverage for major events. Only 51% know the specific details of their policy and coverage. Industry analysis suggests many may be underinsured.

Meeting Homeowners' Expectations and Carrier Needs through Emerging Technologies
Homeowners (70%) are interested in better understanding risks to their home, and nearly eight out of 10 assume some or all responsibility for collecting or providing information about their home. Consumer-led mobile inspections – allowing homeowners to document their property’s condition via mobile devices, capturing photos or videos of the interior and exterior – offer an efficient alternative for carriers looking to improve risk assessments while enhancing policyholder engagement.

“Mobile inspections represent an ideal solution for both Set it & Forget It and Insurance Involved homeowner segments,” said George Hosfield, associate vice president, home insurance, LexisNexis Risk Solutions. "For the less engaged Set It & Forget It homeowners, mobile inspections can help reveal hidden risks and ensure coverage accuracy, and Insurance Involved homeowners, appreciate the efficient, digital interaction. This technology can not only elevate the customer experience but also helps carriers reduce operational costs and improve risk assessments."

According to the study, home insurance carriers offering mobile inspections are perceived as:

• Innovative and forward-thinking by 69% of homeowners
• Customer-focused by 62% of respondents
• Proactive in ensuring adequate coverage, as noted by 67% of respondents

The research found that 71% of homeowner respondents were aware of consumer-led mobile inspections and favor this method over traditional in-person inspection visits. This complements the fact that 61% of homeowners in the study believe assessing risk through their actual home’s condition via a consumer-led inspection is a fair and accurate way to determine insurance rates. This is almost double the number who find it acceptable to only use information from similar homes, such as neighbors’ properties, to compare risk.

By adopting consumer-led mobile inspections, home insurance carriers may:

• Improve risk assessments for the 47% of less-engaged, Set It & Forget It homeowners
• Reduce service costs for the 37% of Insurance Involved policyholders by deflecting service from more expensive, manual channels
• Maintain customer satisfaction for the 63% of homeowners who review their policies at renewal, ensuring they have adequate coverage even after unreported changes to their homes

“As consumers continue to look for cost savings in this challenging economic climate, they are increasingly looking to lower their insurance expenses. Home premiums have risen, and this is certainly contributing to the increased insurance shopping we have seen in recent months,” continued Hosfield. “Our research shows that many are looking for key guidance from their insurers on how to effectively cover their property and how to best mitigate potential risks at their home. This presents a real opportunity for insurers to offer counsel and to build continued trust with customers.

Download the 2024 Home Insurance Consumer Insights Study.

About LexisNexis Risk Solutions
LexisNexis^® Risk Solutions harnesses the power of data, sophisticated analytics platforms and technology solutions to provide insights that help businesses across multiple industries and governmental entities reduce risk and improve decisions to benefit people around the globe. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based analytics and decision tools for professional and business customers. For more information, please visit LexisNexis Risk Solutions and RELX.