Renter’s Insurance: Three Things Captive Carriers Must Learn to Win the Rental Market

For many captive carriers, renter’s insurance has long been the forgotten product. Many agents do a poor job talking about it to their customers because they tend to focus on the higher yield products like auto and homeowner’s insurance. In fact, according to a recent article covering the J.D. Power 2013 US Household Insurance and Bundling Study, many agents tend to look at renters as “the people who haven’t scraped together a deposit on their first home yet,” explained Jeremy Bowler, senior director of the global insurance practice at J.D. Power.

But since the housing bubble burst in 2008, renting has become a more popular practice. Tenants typically don’t have to make repairs when something goes wrong. They can walk away at any time without having to worry about selling at a loss. And depending on the area they choose to live, they can access amenities that would cost a fortune for a homeowner to install themselves. While home ownership may be picking back up, people are easing back into it. This leaves agents with a significant opportunity to shore up business.

In order to make the most of the possibilities, captive carriers and their agents must understand these three things:

Renter’s Insurance Customers Have More Stuff than You Think.

It’s not about your perception of a renter’s material possessions. You may not think they own very much, but to the renter, what they have is valuable. Laptops, Blu-ray players, movie collections, books, tablets, smartphone devices — it adds up. And while the immediate financial gain from selling a renter’s policy may seem like more trouble than it’s worth, as you’re about to see, it can lead to a significant return on investment over the long term. That’s because…

Insurance Customers Are Loyalists.

“If you win the business when no one else cares about them, and you serve the customer well, your persistence on that book is going to carry you into their richer needs,” Bowler said. “In other words, as I grow up in terms of my insurance consumption, if you were the agent that sold me in the early days when nobody else would return my call, you’ve probably got my loyalty — and therefore my long-term value.”

Bowler is right. While some renters stay renters forever, the vast majority have eventual designs on home ownership. As the market picks up, buying activity will increase, and getting these customers early could also mean an uptick in life, home, and car business. Very few customers enjoy shopping for insurance. Getting them early in the process and serving needs that might be perceived as less lucrative will greatly increase retention rates.

By how much? According to the aforementioned J.D. Power study, retention rates went from 67 percent when renters did not bundle with auto to 91 percent when they did.

Captive Carriers Can Win on Price.

Bundling is an incredible way for agents to save their customers money. That’s common knowledge. A renter’s policy will usually cost more if purchased independently. For the same price that a customer would pay on their own, you could bundle renter’s with auto and likely provide more coverage for less money. More importantly, you’ve taken an auto customer, who is one better rate away from leaving your company for another, and you’ve brought more value to their life. As a result, you’ve given customers with a tendency to shop around a lot more to consider.

In Summary

Don’t underestimate the power of the renter! More people are renting today than they were five years ago, and that presents an exciting opportunity to earn their long-term business. The more value you can provide to a customer, the less likely they will want to leave for the possibility of greener pastures elsewhere. Remember, people buy insurance because they want to be taken care of in the event of an unforeseen loss. They don’t want to constantly uproot their coverage. They want to buy it, forget about it, and rest easy knowing it will take care of them should they ever need it. Renter’s insurance is an easy way of bringing them firmly into your company.

Share this Article
Farmers - The Hartford - State Farm - Kemper Direct - Nationwide - Allstate - New York Life