KDSN RADIO News
Cost of Iowa homeowners insurance up 273% in 15 years
A new report indicates the rising cost of insurance premiums may drive more Iowans to reduce their coverage or drop insurance altogether — putting pressure on the state’s insurance industry.
Ben Murrey is Iowa policy director for the Common Sense Institute, which issued the report. “Probably the primary driver of rising premium costs is inflation,” Murrey says, “rising replacement costs.”
Not only does it cost more to repair or replace a home or business that’s damaged, but the analysis also shows the risk of natural disasters like tornadoes is rising in Iowa. The average cost of homeowners' insurance premiums has increased 273% in the past 15 years, climbing to a statewide average of $2533 this year. “It’s the derecho, and it’s the 2008 flood was really big for Iowa,” Murrey says, “and it really made insurers kind of rethink risk here in the state.”
States are starting to figure out how to mitigate the risk of property damage to homes and businesses, Murrey says, to address spikes in insurance premium costs. “Making our buildings more resilient when we build them or also perhaps when we replace our roof, maybe going to higher grade shingles — things like that,” Murrey says, “so there are things that can be done to reduce potential losses, but what’s hard about is it requires a lot of engineering, it requires insurance companies accepting that, hey, the risk is now lower to us because you have improved your building or built a more resilient building to begin with.”
Murrey points to research underway at Iowa State University to determine which types of projects do reduce risk. For instance, heavier shingles may stand up better during a hail storm, but make the roof more vulnerable during a tornado. “You really need the data and the research behind, and you need the industry to be willing to look at that data and be persuaded by that research that, yes, this in fact reducing the possibility of loss, it’s reducing our risk, therefore we can bring prices down,” Murrey says.
If property owners don’t take steps to reduce the risk of storm-related damage, the industry’s National Risk Index predicts insurance companies will pay an average of $580 million a year to cover property losses in Iowa that are caused by severe weather.
