Minnesota consumers are experiencing a sharp rise in premiums in all classes of insurance, with homeowners’ policy rates up an average of 14 percent according to the State’s Commerce Department, which regulates the insurance industry.
In contrast the State’s Workers’ Compensation Reinsurance Association (WCRA) announced that its rates for 2003 would increase by only 5.8%, in stark contrast to comparable figures nationwide, that have registered increases of 50 to 100 percent. “Increases will range from 2.1 percent to 10 percent depending on the retention limit selected by each insurer or self-insured employer,” said the bulletin.
The St. Paul Provident reported that State Farm had raised its homeowners’ rates by an average 21.6 percent, and has been closely examining new policy applications. It also reported that Chicago-based Encompass Insurance Co. had increased homeowners insurance rates in Minnesota by 98.6 percent and 72 percent earlier in the year, and had hiked its auto insurance rates by 30.4 percent.
The article cited statistics from the III’s chief economist, Robert Hartwig, that insurance rates are rising faster in the Midwest than in other regions because of a larger number of storms. It also indicated that the 210 home insurers doing business in Minnesota last year lost $928.8 million on earned premiums of $648.6 million, according to the Commerce Department.
Although the rate increases become affective immediately, they are currently being reviewed by the Commerce Dept. and, if found unjustified, will be presented to an administrative court. The insurers cite the continuing losses they’ve experienced in the state, as well as nationwide claims from Sept. 11 and larger jury verdicts as dictating the necessity for raising rates.
In contrast to homeowners’ premiums, workers’ comp remains a relatively bright spot. Carl Cummins, WCRA president, noted that the association is able to limit its rate increases because they are based solely on the workers’ compensation claims experience of Minnesota employers. “The events of Sept. 11 have had little effect on Minnesota reinsurance rates,” Cummins indicated. “Nationally, however, private reinsurers have raised rates by 50 percent to 100 percent, and double-digit rate increases are expected to continue.” Minnesota is the only state in the nation with a state-authorized workers’ compensation reinsurance organization.
The WCRA was formed to ensure the long-term availability of workers’ compensation reinsurance in Minnesota at reasonable and stable rates. It is “truly demonstrating its value to all participants in the Minnesota workers’ compensation system,” Cummins stressed. “Since 9/11, while commercial reinsurance rates have soared, our rates have actually declined by nearly 7 percent. Today, the WCRA’s rates are actually lower than they were in 1998.”
The announcement also noted that the WCRA would continue to provide reinsurance coverage for any future terrorism losses. State law mandates that it provide 100 percent indemnification for losses sustained by its members in each loss occurrence in excess of the retention limit selected by each member.
Topics Workers' Compensation Reinsurance Homeowners Minnesota
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