This story is part of a grant-funded program at Project Optimist that involved basic journalism training for student and community reporters in central Minnesota. A group of 20 environmental studies students received the training, did field reporting at the U.N. Climate Change Conference and filed stories that highlight their research. Landon Peterson is a junior at the College of St. Benedict and St. John’s University (originally from Minneapolis, Minn.) with a major in political science and minors in peace studies and English. He’s also managing editor at the school’s newspaper, The Record.
Last May, a destructive storm rolled through Minnesota, containing “some of the most extreme thunderstorm winds in recent years,” according to a report by the Minnesota Department of Natural Resources.
With winds greater than 80 mph, the effects of the storm were severe: two fatalities and expensive, physical damage to agricultural structures, homes, garages, hangars, trees and semi-trucks, some of which blew over on Interstate 94. The storm also downed power lines, knocking out power to tens of thousands of businesses and homes.
Extreme weather like this is becoming more and more common in Minnesota. Since 2000, the state has seen a significant increase in devastating, large-area rain, hail, and thunderstorms. In 2022, Minnesota experienced $5.1 billion in disasters, the most in history and a sharp increase from $1.0-2.0 billion in 2021. Climate projections indicate that these high-cost weather events will continue to increase in the future.
The rise in extreme weather has a significant adverse effect: a steep rise in homeowners insurance costs. On average, Minnesota homeowners paid 13.9% more for home insurance in 2022 than they did in the prior year.
That increase ranks Minnesota eighth in the United States for largest increases, at a time when 90% of homeowners across the country have seen their home insurance premium rise since May 2021. The average increase nationwide is $134.
Homeowners spend around 1.91% of their household income on home insurance. That increase will have a minimal effect on those who had no problem paying previously, but for low- and moderate-income individuals and families, the rising cost inflicts a significant burden. The average monthly price of homeowners insurance in the United States for $250,000 in dwelling coverage is around $115, a potentially make-or-break payment when stacked alongside other living expenses.
In November, the United Nations Climate Change Conference (COP27) in Sharm El-Sheikh, Egypt, highlighted a number of different innovative strategies for governments, insurers and organizations to consider.
Ekhosuehi Iyahen, Secretary General of the Insurance Development Forum, a collection of public and private insurance stakeholders dedicated to risk management, praised Global Risk Modeling Alliance and other public-private partnerships that enable data sharing between insurance companies and governments. Many insurers are refusing to fund carbon-intensive and other climate-negative projects, like the more than 30 insurance companies that have limited the underwriting of coal projects, offering the potential to make major headway against climate change.
Local strategies appear to be less prevalent. An “Investing in Resilience” panel at COP27 highlighted a Resilient Cities Network initiative that brought insurance experts to Indonesia to speak with and educate prospective consumers on the benefits of property and casualty insurance. It’s unclear if a strategy like that would be applicable in Minnesota, where coverage and insurance options are widespread.
Look for the Minnesota Legislature to consider several options that increase home affordability during the 2023 session. One route may be to offer home insurance incentives for consumers that reinforce their homes to higher building codes, a unique public-private partnership that has had success in Alabama.
Home insurance can promote development and offer investment protection. However, rising rates may force consumers to opt-out of insurance or prohibit potential purchasers from being able to buy.
Much needs to be done to stabilize rising insurance rates in the face of climate change, in Minnesota and beyond.
As Selita Pulini Tikoibua, Pacific Coordinator for the Loss and Damage Youth Coalition, highlighted at COP27: “Often, those who have done the least to cause climate change suffer the most.”