ST. PAUL (AP) -- Homeowners insurance rates rose more in Minnesota in 2002 than the national average, putting the state near the top in the rates people pay to insure their homes.
The Minnesota Department of Commerce says premium rates went up an average of 22.9 percent among the top 10 Minnesota home insurance carriers in 2002. Those 10 carriers serve more than two-thirds of the state.
A new survey by the Consumer Federation of America shows that the median increase in the cost of homeowners insurance in 34 states surveyed last year was 13 percent, with mold blamed as the leading cause, followed by catastrophes, investment income decreases and reinsurance costs. Minnesota was not included in that survey.
Premium increases in 2002 ranged from 4 percent in Oregon to 57 percent in Texas, the consumer group reported. Only Iowa, at 33 percent, and Texas posted higher increases than Minnesota's among the states in the survey. Wisconsin's increase was 15 percent.
In Minnesota, storm and investment losses were the main drivers behind the increase, said Bruce Gordon, a Commerce Department spokesman.
Minnesota homeowners rates once were considered a bargain compared with those in other states, but weather catastrophes in the late '90s changed that.
Generally, insurance companies expect to pay about 60 cents in claims for every $1 in premiums collected, according to the Commerce Department. In 1998 -- a year of hailstorms and tornadoes -- claim costs were 295 percent of premiums, meaning that companies paid out $2.95 in claims for every dollar of premiums.
"That was the beginning of a bad trend," said Al Parsons, president and CEO of the Insurance Federation of Minnesota, a trade group.
Continued bad weather, coupled with investment losses and a spike in the cost of reinsurance after the 2001 terrorist attacks, added to the problem, Parsons said.
Last year was the first year since 1997 when Minnesota homeowners premiums exceeded losses, the Commerce Department said. In 1998, losses were $1.5 billion, compared with $521 million in premiums collected. Last year, losses were $576 million, and premiums were $868 million.
Brainerd Dispatch ©2013. All Rights Reserved.