An article in Sunday’s Minneapolis Star Tribune highlighted recent increases in homeowner insurance premiums in Minnesota attributable to more numerous storm events over the last few years. According to the article, 2012 homeowners insurance rates increased 10% to 12%. Increases in 2011 averaged 7% and in 2010, 8%.
In response to inquiries from the reporter who wrote the article, the Department of Commerce stated that the homeowners insurance marketplace in Minnesota “remains very competitive.” The Department further noted that the insurer loss ratio for homeowners insurance has averaged 98% over the last five years, allowing only 2% for insurers to recover the costs of doing business and a profit. Nevertheless, Commerce Commissioner Rothman has ordered a full review of the 24 homeowners insurance rate increases identified in the article. That analysis will be submitted to the Legislature at the 2013 legislative session for their review.
In addition, the Department announced a five-point plan to be implemented immediately to bolster the current homeowners insurance rate review process. That enhanced review includes:
All requests for homeowners insurance rate increases equal to or in excess of 10% where the requesting insurer's average loss ratio for the preceding years is equal to or less than 75% will be referred for actuarial review;
Homeowners insurers when filing rates will be required to submit the company’s three year average homeowners loss ratio;
Insurer rate increase requests and their corresponding loss ratios will be monitored in an on-going marketplace analysis to insure competition and that the rate increase remains justified;
An annual Homeowners Insurance Report including rates, loss ratios and claims, will be prepared by the Department for consumers; and
The Department will continue consumer outreach and financial literacy efforts through consumer alerts.
Even prior to the Star Tribune article, it was expected that homeowners insurance and weather related claims would the subject of legislation during the 2013 session. The analysis now being prepared by the Department of Commerce will serve as the basis for much of those deliberations.