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High winds, tornadoes, hail, derechos and flooding have caused considerable damage across Iowa in recent years. Insurance companies are now shouldering the burden as claims rise in Iowa, and are bracing against the impact.
“Now is not a good time to be shopping for [home and auto] insurance policies,” says Lois Ibbotson with Tyler Insurance.
Local insurance representatives all agree consumers can expect a 15-20% increase in rates this coming year.
“Rates could not sustain the level of loss on claims paid out,” stated American Family representative Katie Turner, “in the last seven years, the cost of replacing a roof has tripled.” According to Turner, some companies, like American Family Insurance, increased rates along the way, which helps keep pace with rising costs.
Meanwhile, other insurance companies are pulling out of Iowa, citing increased claims related to severe weather as the reason they are not renewing or taking on new policies.
On May 16, 2023, Farmers Mutual Hail announced their strategic decision to exit the P&C insurance market as a carrier to their Property & Casualty (P&C) agency partners.
Farmers Mutual Hail plans to remain active in the P&C market, but has chosen to leverage their in-house brokerage (Ag Brokerage Solutions) to place P&C coverage going forward rather than operate as an insurance carrier.
David DeCapp, Sr. Vice President, Marketing at Farmers Mutual Hail stated in an email to the Record News, “With the help of our new wholesale brokerage, Ag Brokerage Solutions™ (ABS), we have secured multiple A-rated farm & ranch markets to assist current FMH property and casualty policyholders in finding new coverage options.”
“That took half our business,” states Bill French, who owns and operates William H French Agency.
Grinnell Mutual is also no longer reinsuring some companies.
Coverage gaps are snowballing as bigger companies no longer want to reinsure Farmers Mutual and Grinnell Mutual Iowa policies. Historically, reinsurance has provided stability in the market, as they assume some of the risk and help keep the market stable.
Pekin Insurance is calling their decision to pull out of Iowa “accelerating our strategic plan to focus on more profitable commercial lines and life business.” According to a news release on their website, “As we put these strategies in place, it is necessary for us to reduce our personal (home and auto) and property exposures by reducing coverage in select storm-prone areas.”
“So far we have been able to find alternative coverage for people, stated Debra Larson with The Insurance Station, “We have written close to ten new policies in the last month.”
Celina Insurance Group pulled out of Iowa last year. In their 2021 Annual Report, Celina President and CEO William Montgomery stated “The company took aggressive steps in Iowa to reduce property exposures, limiting the future influence of Iowa weather that has adversely impacted past results. In 2021, we stopped writing and nonrenewed unsupported Commercial Habitational business and Monoline Homeowners business.”
Cameron Mutual Insurance will be closing their doors at the end of December. According to a statement on the Cameron Insurance website, “Effective December 1, 2023, the Circuit Court of Cole County, Missouri ordered that CMIC be liquidated.”
IMT Insurance has placed a moratorium on homeowners insurance in Iowa, according to Bill French. “Over 75 years, I’ve seen 7 or 8 companies come and go,” French says, “Insurance companies have tried to cover everybody for everything and broadened policies so much.”
“Insurance companies have written themselves out of business,” states Jodie Wurster, “they’ve opened themselves up to more exposure.”
Local insurance representatives are saying $2,500 minimum deductibles are to be expected.
“People need to reassess what they cover and can do without,” states French.
Casey Willis with The Insurance Station suggests considering “Is it really worth insuring?”
“Insurance was made for catastrophic losses,” says Ibbotson. “Most insurance companies are reviewing claims closely,” states Ibbotson, “no claim history is what they want.”
“People need to self insure a little, and absorb some of the loss,” says Wurster, “just can’t submit everything as claims.”