Unprecedented Iowa storms are causing turbulence in the insurance market and major premium hikes.
Ridin’ The Storm Out: Understanding Upcoming Changes in Property Insurance Premiums
REO Speedwagon wasn’t singing about Iowa storms, but we appreciate the sentiment. Look, if you’ve lived in Iowa more than a few years and aren’t currently dwelling under a rock, you’ve likely noticed an increase in serious storms that left property damage. There was the infamous 2020 derecho (which most Iowans didn’t even know was a thing until then) that wreaked havoc across a good portion of the state. And we’ve continued to see more frequent hail and windstorms. We’ve been replacing our roofs, siding, and car windshields just to experience more damaging hail and wind soon after.
While we can be thankful for Homeowners and Auto insurance that covers a good portion of property damage, the increase in settlements that carriers are paying unfortunately doesn’t come without a cost to all of us.
Understanding the Impact of Increased Storm Activity on Insurance
In terms of risk, Iowa has historically been a good location for insurance carriers. We’ve generally had mild weather, and insurance premiums have reflected that lower risk with favorable premium pricing…until now. With the increased pattern of damaging storms, the property insurance industry needs to balance payouts with income and has responded with consistent, periodic premium increases. This trend isn’t limited just to Iowa; it’s happening across the country as well.
Take, for example, the hailstorm that hit the Des Moines metro last August. One single storm destroyed nearly 50,000 cars and thousands of roofs. And that’s just one storm — there have been several others. Considering the significant settlement amounts to repair cars and replace roofs, it’s natural for carriers to bump premiums to help manage the increases in activity and dollars.
Some of the activity we are seeing across the board includes:
- Stricter Underwriting Guidelines – Limiting new policies carriers write based on roof age, claims history and insurance scores. This is intended to filter out more risky exposures.
- Cancelling Accounts – Carriers non-renewing existing customers with frequent losses or unique exposures to help reduce risky exposures.
- Increased Renewal Premiums – For the clients carriers want to keep, they are increasing premiums on average 20% or more at renewal.
- Changes to Policy Contracts – This hasn’t happened yet, but we expect companies to change how claims are paid. Removing replacement cost coverage on roofs, raising required deductibles for wind and hail losses and/or cosmetic damage exclusions are possible.
We’ll Help You Through It – Promise!
As industry experts, we’ve traveled stormy waters (pun intended) before, and we’re always prepared to do it again. We understand you may be worried, especially about the impact of these changes on your premiums. Our goal is to help you understand what’s happening and how it may affect you, while also being proactive in helping to minimize change on your end while ensuring you’re still getting the best coverage possible.
So, this is what we’re doing behind the scenes:
- We’re continuing to assess our current insurance carrier lineup along with exploring new carriers to ensure you’re getting the best combination of price and coverage available.
- This might mean we stop offering certain carrier products and services, especially if they aren’t proving to be in it for the long term in Iowa.
- It might also mean we bring new carriers to the table for you to consider — rest assured, they’ll be fully vetted.
- Above all, we are always proactively looking closely at all options to provide only the very best protection for all our clients. Did we mention always? Because…
What That Means for You
The adjustments happening now are a response to broader market conditions; they’re designed to keep the industry stable. But when premiums go up, it’s natural to be concerned about affordability. In response, we review coverage options and deductible structures to make sure they continue to align with your needs. We want to ensure that your insurance coverage remains robust, even in the face of unexpected events — with the least impact on your personal budget as possible.
As we ride out this particular storm together, please be confident that your Vibrant team is here watching out for your best interests as weathered guides. And remember, in our experience through years of change, sunshine tends to follow the storm.
