More extreme weather driving increased homeowners insurance premiums, industry official tells Minn. House panel
ST. PAUL, Minn. -- Minnesota homeowners insurance premiums have soared by nearly 400% in the last two decades as destructive weather events become more common, an industry official told a House panel Wednesday.
In 1998, the average annual cost to have a home insured in Minnesota was $368, but that increased to $1,433 in 2019. That's 14th highest rate in the county, said Mark Kulda, vice president of public affairs at the Insurance Federation of Minnesota, a trade association.
"Back in 1998, the trend for homeowners increases was generally the increased cost of the homes. Now it seems to be more driven by the fact that the homes are getting struck by more weather," he testified to lawmakers. "We are seeing a lot more storms and a lot more storm claims, which is why our premiums have gone up so high."
State data show Minnesota's climate is getting warmer and wetter with more frequent and intense rains. Kulda in his presentation noted several extreme weather events in the last two decades that both were destructive and expensive, including a 2017 hail storm in the northern Twin-Cities suburbs that totaled $3.2 billion by the time all of the insurance claims were paid.
Insurance companies are anticipating it will get worse, and further premium increases are likely to follow, he said. In addition to more frequent devastating weather events, the cost of labor and materials for rebuilding has also shot up, contributing to price hikes.
"The ask by insurers for price hikes is continuing and to the point where it's going to be a very large increase for this year because we've had a couple of companies that said that this last year was their 'worst year ever,'" Kulda said.
Kulda's presentation was merely informational to the House Sustainable Infrastructure Committee, a new panel formed this year in part because the state will see an influx in federal funds coming from the infrastructure law approved by Congress in late 2021.
He said that Minnesotans may get discounts on insurance by rebuilding their homes or renovating them with climate-resilient materials. Minnesota outpaced neighboring states in incurred insurance losses last year, according to the Insurance Information Institute.
Lawmakers on Wednesday also advanced a bill earmarking money for the University of Minnesota to study how future weather predictions can be built in to building designs to minimize damage.
Separately, Gov. Tim Walz's budget plan includes a "Strengthen Minnesota Homes" program run by the Minnesota Department of Commerce, which would provide financial assistance to Minnesotans for home improvements that will better prepare for storms and reduce of recovering from them.
"By mitigating climate-driven insurance risk, the program will help insurance markets remain stable, competitive, and affordable," the proposal from the governor's office says.
Another bill in the legislature would provide grant funding to local communities to adapt to extreme weather events.
