Homeowners insurers in Iowa have responded to mounting catastrophic weather losses, inflation, and rising reinsurance costs by increasing premiums, limiting exposure, and adjusting underwriting strategies, according to Iowa Insurance Division Consumer Advocate Sonya Sellmeyer.
The direct combined ratio for homeowners multiperil writers in the state reached 141.03 in 2023, based on data from the top 70 insurers. This followed a five-year trend of underwriting losses, with an average combined ratio of 120.05 from 2019 to 2023.
The only year in that period when the aggregate combined ratio was below 100 was 2019, when it stood at 84.22.
Since the beginning of 2024, Iowa regulators have approved at least 115 homeowners multiperil rate filings, with more than three-quarters resulting in rate increases. The largest approved increase was 50.8% for Westfield Group’s American Select Insurance Co, effective April 24.
Rate increases have also been implemented by some of the state’s largest homeowners insurers. State Farm Fire & Casualty Co. raised rates by 17.5%, while four Nationwide subsidiaries received approvals for increases ranging from 30.7% to 31.6%.
Three American Family Insurance companies implemented hikes between 8.9% and 29.7%, and three Auto-Owners Insurance Cos. units increased rates by 17% to 24.858%.
Other national insurers have followed 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 said that despite some insurers withdrawing from certain lines of business or tightening underwriting guidelines, the market remains stable. She noted that policyholders who have been nonrenewed have generally been able to secure coverage with other standard carriers.
In 2024, Iowa homeowners saw a notable rise in insurance premiums. According to an Insurify report, premiums increased by 14% from October 2023 to October 2024, with the average annual cost reaching $2,416. This surge positioned Iowa as the third-highest state for year-to-date premium increases.
The escalation in premiums is largely attributed to the increased frequency of extreme weather events, such as hail storms and tornadoes, which have led to higher claims. For instance, some Cedar Rapids residents reported home insurance rates jumping from $1,200 to $2,100.
Additionally, some insurers have scaled back coverage options. Notably, major companies have reduced roof coverage, leaving homeowners with substantial out-of-pocket expenses for repairs. This shift has resulted in financial strain for many, as they navigate the reduced coverage landscape.
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