County braces for upcoming increase in insurance premiums

The Montgomery County Board of Supervisors is bracing for an insurance price jump.
Recently, the supervisors met with Rick Taylor of Davis-Taylor Insurance to discuss the upcoming changes with the Iowa Communities Assurance Pool (ICAP.) Taylor said he’s the appointed ICAP representative for the pool the county participates in.
“Recently, I received a call from an ICAP representative saying they were in difficult negotiations for reinsurance for the coming year. At that time, they kind of gave me a little indication of proposed changes that were not set in stone,” Taylor said. “There was information released that shows some of the changes they’re talking about in the pool. Some are not of great concern, but it will impact you negatively when it comes to budgeting.”
Taylor said one of the biggest changes was in the rates for property insurance.
“They’re moving to a 2% deductible of the structure limit. Not of the loss, but of the structure limit, so you’re talking about a very large deductible, especially on a building like the courthouse. In the past, the deductible has been $5,000. This is dictated by reinsurance, and there’s no budging or adjustment. This is happening to every county that uses ICAP insurance,” Taylor commented.  
Another change was that roofs that were 15 years of age or older would be adjusted at actual cash value, or depreciated value.
“In the past it was adjusted at replacement value. If the roof is newer than 15 years, it will still be adjusted at replacement value, less the 2% deduction for wind and hail. They are also looking at an increase of 30% to 35% in premium,” advised Taylor. “Every county will be taking a 30% or 35% increase, so even counties that haven’t had a bad loss ratio will be affected, as well as all the deductible changes and adjustment changes.
Taylor shared the loss ratio for Montgomery County, and said the property loss ratio was the worst, at 162%
“That means for every dollar they took in, they paid out $1.62. The overall loss ratio is 111%. However, it was actually the convection storms that have been hitting Iowa have primarily been the driving force in these reinsurance changes,” explained Taylor. “Convection storms are those that contain tornado, hail, and wind. The severity and frequency of the convection storms has been off the chart, and reinsurance companies have lost huge money. This is basically a move for their survival. One group that is a non-profit pool for governmental entities across the U.S. mentioned Iowa as specifically being detrimental to their overall results.”
Taylor said he was not surprised in one case that roof adjustments were being changed.
“There’s been storm chasers and public adjusters pushing for replacement on roofs in cases where they maybe didn’t need it. The industry as a whole is moving towards actual cash value on roof adjustments. I have some standard insurance companies that have already made  the change, and replacement coverage on roofs may be a thing of the past,” stated Taylor.
Taylor added he invited an ICAP representative to present with him, but the organization was busy covering counties with representatives that were up for Jan. 1, 2024 renewals. However, the info needed to be shared.
“I can have an ICAP representative come out at a later time, but I felt I needed to get here now and explain what was coming. Hopefully, the reinsurance issue will also be resolved in the near future. An agreement is in place, but there are a few details left to wrap up.”
Taylor said he did not have the numbers available for the county’s renewal premium, but he was able to share some details of what to expect.
“In 2021, the ICAP contribution was $110,261. In 2022 the contribution was $134,988. In 2023, the contribution was $168,571, and for this coming year, my guess is that it’s going to be somewhere in the range of $200,000 to $205,000. That’s just a guess. It’s not based on anything I’ve received from ICAP yet. Once they have the final numbers, I want them to come here with me and meet with you and explain what we’re dealing with and why,” Taylor said.
Taylor added the insurance jumps weren’t just limited to ICAP, and it appeared to be an insurance industry move.
“I’m seeing similar increases on the property/casualty side of insurance I’m delivering to businesses and homeowners. The insurance industry is in crisis. I’ve met with legislators on the state and national level, but I’m not sure anything can be done about it other than an adjustment,” Taylor commented.
Problems have been growing so quickly that Taylor cited a number of older insurance companies that were insolvent and being liquidated.
“One company I represent has been in business since 1892. They just received a court order for liquidation. The convection storms seem to have put them under and killed them. Most of the problems seem to be on the property side. I’m not seeing a lot of changes on the liability side. Part of it is inflation and part of it is the cost of materials,” Taylor advised.
Additionally, some insurance companies, Taylor said, don’t have the capability t take on new policyholders at this time. Also, while saying insurance companies have handled major storms in the past, the historical change being faced was the frequency and severity of the storms.
“It was absolutely amazing compared from 20-30 years ago to now. The frequency was 17 to 18 days apart, when it used to be 60 to 90 days apart,” stated Taylor.
Taylor said when he gets the final numbers and can secure an ICAP representative to attend, he will ask to be placed on the supervisors agenda again for further discussion about the insurance increases.