Rising auto, home insurance premiums stinging Minnesotans
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Minnesotans are feeling the pain of some of the fastest-rising home and auto insurance rates in the country — with no signs of slowing.
Why it matters: Avoiding these costs is tough; drivers are required to have insurance in Minnesota and most banks require home insurance for mortgages.
Driving the news: Minnesota's auto insurance rates rose 55% year-over-year through June 2024, the highest increase in the nation, according to a report by Insurify, a policy comparison site.
- Meanwhile, home insurance premiums in the state shot up 39% from 2017 to 2023, the 12th-highest jump in the country, according to an article by the Federal Reserve Bank of Minneapolis, which cited S&P Global data.
The intrigue: Many factors lead to jumps nationwide, including more expensive homes and cars as well as rising costs for labor and material to repair or replace them.
Yes, but: Minnesota's rise is also tied to climate change, Julia Dreier, the state Department of Commerce's deputy commissioner for insurance, told Axios.
- "It's really easy for people to think about climate change impacting California and Florida with fires and hurricanes, but here in Minnesota, we're seeing that playing out with more severe wind storms ... and then we're also seeing more hail storms, and all of those things cause significant damage."
Between the lines: Homeowners insurance doesn't show up in the consumer price index, so the rising burden isn't reflected in monthly inflation data, reports Axios' Emily Peck.
- Plus, as the Minneapolis Fed notes, what homeowners receive for their premiums has decreased as "insurers impose new conditions on coverage of common perils such as wind and hail damage."
Context: Minnesota's average annual cost for full coverage auto insurance — $2,315 — now ranks 32nd out of 50 states, according to Insurify.
- The state's homeowners insurance costs also fall in the middle of the pack, according to S&P Global.
What we're watching: The Department of Commerce regulates rate increases, and Dreier told the Fed in a prior interview that insurance companies in Minnesota have been losing money for five years and that justifies their hikes.
- That trend hasn't ended, she said.
- "We're still seeing a pretty significant number of rate increases."