Minnesota lawmakers try to drive home climate effects on house insurance costs

Last August, a snap hailstorm that blew through the Twin Cities area added Minnesota to a distressing list: It was one of 28 billion-dollar weather and climate disasters to hit the country.

“That’s about 30 minutes of a storm, and it was a billion-dollar weather event,” said Julia Drier, a deputy commissioner at the state Department of Commerce who leads the agency’s insurance division. “While we may not look quite as bad as Texas, what we’re really concerned about is the compounding effect of these storms.”

By that, Drier is referring to weather events occurring with more frequency that are leading to more claims for home, auto and other insured repairs. The increased claims are one factor in rising premiums. 

The connection between climate change and costs to insurance companies and their clients was the focus Wednesday of a legislative hearing. It was in the House Commerce Committee, chaired by DFL Rep. Zack Stephenson. 

“Climate change, people think is the thing that’s happened for their kids and grandkids but it’s actually something that you’re paying for right now,” Stephenson said as he opened his committee’s first hearing of the year.

“Extreme weather events,” he added, “are more and more common and they are having big impacts on the premiums that Minnesotans are paying for their insurance.”

The committee advanced a bill that would provide more consumer protections when natural disasters hit. It seeks to prevent big price spikes — some call it gouging — when tree trimmers, restoration companies and similar businesses respond to downed limbs or building floods. 

The bill, which makes just a few lines of changes to an excessive price prevention law, heads to the full House next.

But the broader discussion of how a shifting climate touches a lot of things was Stephenson’s main aim.

“Minnesota is getting warmer and wetter. Our warmest and what is years on record have all occurred after 1997,” Heidi Roop, the director of the University of Minnesota Climate Adaptation Partnership, told lawmakers. “We are already measuring a 13 percent increase in the heaviest rainfall of the year. And our growing seasons have lengthened by two weeks since 1950.”

Roop said the frequency and intensity of extreme weather events are going up and are likely to continue to do so. 

Aaron Cocking, president of the Insurance Federation of Minnesota, said his members see it in claim filings for new roofs, replaced siding and tree-limb cleanup.

“The impact of climate on the insurance market and especially the insurance market in Minnesota has become clear to almost everyone, most of all to those paying insurance premiums,” he said. 

Cocking said the average Minnesota homeowner’s premium was $368 a year in 1998. By 2021, that had climbed to more than $1,600.

“Insurers are paying out significantly more in losses there than they’re collecting in premiums across the country,” Cocking said. “But especially here in Minnesota, much of the biggest losses are being driven by changing weather.”

Rep. Larry Kraft, DFL-St. Louis Park, said he hopes the discussion illustrates the need for more robust conversations surrounding climate this session. 

“I was at another committee meeting this morning when I heard a complaint of discussing climate in it because the name of the committee didn’t have ‘climate’ in the committee name,” Kraft told his colleagues. “And what we see here and what we see all around is that climate change impacts virtually every issue and impacts virtually every committee.”