Nationwide report urges proactive approach to rebuild trust in insurance sector

Homeowners’ insurance replacement costs increased by 55% between 2020 and 2022, and almost two-thirds of U.S. drivers now find auto insurance unaffordable, according to a new report from Nationwide. The company argues that the personal lines insurance sector needs to move from a reactive “repair-and-replace” model to a proactive “predict-and-prevent” approach to restore consumer trust and ensure long-term industry sustainability.

“With premiums on the rise, consumers have become increasingly anxious about affordability, coverage, and control. At the same time, carriers and agents are working harder than ever to retain customers in an environment where confidence is low and expectations are high,” said Casey Kempton, president of Nationwide Personal Lines and author of the report. “These challenges signal an opportunity to transform insurance in the minds of consumers. Today, we must promote a shift toward a model that encourages a predictive and preventive way of thinking amongst consumers.”

Nationwide’s whitepaper identifies three major trends disrupting the traditional insurance model. Economic uncertainty has made insurance less affordable as home values have nearly doubled over the past decade and new car prices have risen by about 60%. Mortgage rates above 6% are adding further pressure on household budgets, forcing many consumers to reconsider their coverage options.

The report also notes an increase in weather-related catastrophes, which are now more frequent and severe. Events such as the 2024 Hurricane Helene and 2025 Guadalupe River disasters affected areas not previously considered at risk, showing that traditional risk zones may no longer be reliable.

In response to these pressures, consumer behavior has changed. In 2024, 20% of consumers delayed necessary home repairs or renovations, potentially increasing future risks. On the roads, 92% reported more aggressive and distracted driving, while 88% observed more reckless driving overall.

These trends have contributed to what Nationwide describes as a “broken cycle of trust” between insurers, agents, and consumers. As weather events become less predictable and repair costs rise, insurers face challenges with predictive models and may reduce their presence in certain markets or tighten underwriting standards. This often leads to higher premiums and fewer coverage options, prompting customers to lose trust and reconsider their policies.

The report also points out that decades of “switch and save” advertising have shifted consumer focus toward price rather than value, weakening the perceived importance of insurance and straining relationships within the industry.

To address these issues, Nationwide’s whitepaper calls for a shift toward a predict-and-prevent mindset, positioning insurers and agents as “assurance providers” who help avoid losses rather than just paying claims after they occur. The report suggests using smart home sensors to detect water or electrical issues early and telematics programs to encourage safer driving habits through real-time feedback.

It also recommends strengthening building standards, such as adopting FORTIFIED roof standards from the Insurance Institute for Business & Home Safety (IBHS), which help homes better withstand severe weather through sealed roof decks and regular inspections.

Nationwide emphasizes that this transformation requires collaboration across the industry:

- Carriers should invest in partnerships and innovations that reduce losses, sharing data and best practices.

- Agents and brokers need to focus on prevention rather than price when advising customers.

- Regulators and policymakers should support new pricing models and technologies while encouraging safety legislation.

- Customers are encouraged to see insurance as protection for their most valued assets and adopt risk-reducing technologies.

“Shifting to a predict-and-prevent way of thinking helps consumers and everyone in our industry win,” Kempton said. “It can reduce losses and claims before they occur and lower premiums. It can also strengthen relationships, building the kind of customer loyalty and peace of mind that pricing alone can’t buy.”