How are ‘kitty cat’ storms impacting home insurance in Iowa?
In Iowa, the increasing frequency and severity of “kitty cat” storms are significantly affecting the home insurance landscape.
Kitty cat storms are small but powerful convective systems that produce hail and tornadoes. These storms are classified as secondary perils.
Traditionally, Iowa’s relatively stable weather patterns made it a low-risk area for insurers. However, the increasing severity and unpredictability of these storms changed this perception.
The small storms have led to substantial insured losses throughout the Midwest. These losses are similar in magnitude to major hurricanes in coastal states.
Insurers grapple with substantial losses, as a result of the the rising frequency of such events, that were previously unseen in the region.
Between 1989 and 2022, losses from severe convective storms increased by 9% annually. This culminated in over $50 billion in insured losses last year.
Consequently, this leads to a challenging environment for both insurers and homeowners. The surge in damage has forced insurance companies to reassess their risk models.
The results are higher premiums and the discontinuation of coverage for many homeowners in Iowa. This leaves homeowners scrambling for affordable coverage.
Why are insurance companies leaving the state?
Insurance companies are increasingly withdrawing from Iowa due to the unpredictable and costly nature of convective storms.
Moreover, the rapid succession of destructive storms has made it difficult for insurers to recover financially.
Events like the derecho in 2020, followed by a series of windstorms, hail, and tornadoes, have compounded the financial strain on insurance companies.
Major insurers such as Secura and Celina Insurance Group have pulled out of the state, citing the inability to raise rates sufficiently to cover the mounting losses.
In 2023, for instance, insurers paid out $1.44 in losses for every dollar earned from premiums in Iowa. It marked the fourth consecutive year of such losses.
This trend has prompted insurers to either exit the market or implement substantial premium hikes.
Iowa is now a high-risk area, which forces insurers to reconsider their presence in the state. It leaves many homeowners vulnerable, as they struggle to secure insurance to protects their investments.
What can Iowa homeowners do to mitigate these challenges?
To address the rising costs and decreasing availability of home insurance, Iowa homeowners must invest in storm-resilient measures.
Enhanced building codes and stronger construction materials can make homes more resistant to hail and tornado damage, potentially lowering insurance premiums.
For example, adopting stricter building standards similar to those in Moore, Oklahoma, could help mitigate damage and reduce insurance costs.
Moore’s implementation of robust storm-resilience standards, including hail-resistant roofs and stronger structural joints, has significantly reduced damage during storm events.
State regulators also play a crucial role in stabilizing the insurance market. They must balance the need for reasonable premiums with the financial viability of insurers.
The state could implement incentives for homeowners to upgrade their properties and ensure fair rate adjustments based on actual loss data are critical steps.
Proactive measures, such as mandating insurance discounts for homes that meet higher resilience standards, can encourage widespread adoption of storm-resistant features.
Moreover, public awareness and education about the benefits of storm-resistant upgrades are essential.
Homeowners should be informed about available incentives and the long-term savings that come with investing in resilient infrastructure.
Community-wide efforts to fortify homes can collectively reduce the overall risk and, consequently, the insurance burden.