Iowa Homeowners See Premiums Surge as Insurers Respond to Mounting Costs
Homeowners in Iowa are grappling with escalating insurance premiums as the state’s insurance market adapts to a confluence of factors, including a rise in catastrophic weather events, inflation, and increased reinsurance expenses. According to Iowa Insurance Division Consumer Advocate Sonya Sellmeyer, these pressures have prompted insurers to adopt strategies like premium hikes, limitations on coverage, and adjustments to their underwriting practices.
The financial strain on insurers is evident in the data. In 2023, the direct combined ratio for homeowners multiperil writers in Iowa reached 141.03, based on an analysis of the top 70 insurers. This follows a five-year trend of underwriting losses, with an average combined ratio of 120.05 from 2019 to 2023. The only year within this period when the combined ratio fell below 100 was 2019, at 84.22.
Since the start of 2024, Iowa regulators have approved at least 115 homeowners multiperil rate filings, with over three-quarters resulting in higher premiums. Westfield Group’s American Select Insurance Co. saw the most substantial approved increase, a 50.8% hike that took effect on April 24. Several of the state’s largest homeowners insurers have also implemented rate increases.
- State Farm Fire & Casualty Co. raised its rates by 17.5%.
- Four Nationwide subsidiaries gained approvals to increase rates, with the hikes ranging from 30.7% to 31.6%.
- Three American Family Insurance companies implemented increases between 8.9% and 29.7%.
- Three units of Auto-Owners Insurance Cos. increased rates by 17% to 24.858%.
Other national insurers are following suit. Progressive Insurance received approval for a 34.7% homeowners rate increase in April. Allstate, Farmers, and Liberty Mutual were among the carriers granted double-digit rate hikes.
In a report from AM Best, Sellmeyer stated that despite some insurers reducing their exposure in certain lines of business or tightening their underwriting standards, the market remains stable. She also noted that policyholders who have been nonrenewed have typically been able to find coverage with other standard carriers.
Premium Increases Hit Iowa Homeowners
In 2024, Iowa homeowners faced considerable increases in their insurance premiums. An Insurify report revealed a 14% increase in premiums from October 2023 to October 2024, with the average annual cost reaching $2,416. This placed Iowa as the third-highest state for year-to-date premium increases.
The escalating premiums are primarily due to the increasing frequency of severe weather events, such as hail storms and tornadoes, which have led to a surge in claims. For example, some residents of Cedar Rapids reported their home insurance rates jumped from $1,200 to $2,100.
Additionally, some insurers have scaled back coverage options. Major companies have reduced roof coverage, leaving homeowners with potentially substantial out-of-pocket expenses for repairs. This shift has created financial challenges for many, as they navigate the limitations of their coverage.
