Climate Cast: Minnesota near #1 in extreme weather ‘catastrophic losses’ in 2013

  1. Listen Climate Cast: Extreme weather discussion on The Daily Circuit

    Jan 9, 2014

The new ‘Florida’

That’s what insurance experts are calling Minnesota when it comes to catastrophic insurance losses from extreme weather events the past several years.

In 2013, Minnesota lead the nation in catastrophic losses for the first three quarters according to Insurance Federation of Minnesota President Bob Johnson. Johnson says Minnesota may end up in the number two spot once the final fourth quarter tally comes in. Widespread damage from the Midwest November tornado outbreak  may vault Illinois into the top spot for 2013.

A big chunk of Minnesota’s losses in 2013 were generated by a single storm. The National Night Out hailstorm of Aug. 6 has generated $800 million in claims in Minnesota and still counting, according to Johnson.

Severe hail and wind caused extensive damage Aug 6 / Eden Prairie Police

The Aug. 5-7 severe wind and hail outbreak was centered on Minnesota, and is listed as one of eight “billion dollar weather disasters” in the United States in 2013, according to Weather Underground’s Jeff Masters and Aon Benfield.

Weather Underground / Aon Benfield

Severe winter and ice storms and damaging severe convective storms in June also boosted Minnesota’s cat losses last year.

‘Minnesota Meltdown’ ahead?

The new numbers from 2013 vault Minnesota  into the top three states in the nation for catastrophic losses in three of the past seven years.

In 2007, Minnesota ranked No. 2 with $747 million in catastrophic losses.

ISO Property Claims Unit  / Bob Johnson

In 2008 Minnesota rolled in at No. 3 with $1.5 billion.

ISO Property Claims Unit / Bob Johnson

The fact that landlocked Minnesota has piled up higher losses than many of the “hurricane states” has stunned some in the insurance industry. The balance sheets of many insurers with large risk exposure in Minnesota and the Upper Midwest have taken a hit.

In November, I listened as Johnson described a potential “‘Minnesota Meltdown” in homeowners insurance in the near future at Minnesota’s first climate adaptation workshop.

The spike in catastrophic losses in the past decade has pushed Minnesota homeowner rates a wallet denting 267 percent higher between 1997 and 2010 according to Johnson. He described Minnesota’s changing insurance landscape as “growingly unstable” and Minnesota’s catastrophic loss levels as “unsustainable.”

Here’s the email Bob shared with me this week regarding the uptick in Minnesota’s catastrophic losses in 2013.

I listened with great interest to your comments on the above program. I’m glad you were able to use some of the insurance weather claims information that I presented at both the Environmental Congress and Climate Adaptation Conferences last year.

I thought you would find useful the fact that Minnesota through 3 quarters of 2013 was the number 1 state nationally in weather related CAT losses, with about $845 million paid. This number is still growing, so we expect it to hit $1billion. We will likely move to 2nd place for the year when the numbers for the Illinois storms come in.

Lastly, one of my member insurers recently held a program for customers and agents, with a presentation by WeatherPredict Consulting Inc. These experts stated that severe convectice storms ( scs) will be at a heightened level for the next 5 years. They stated that over the last 10 years in our state scs have been 15% above normal or average levels.

Our organization will continue our aggressive public outreach to educate consumers on the impact of weather claims on their property insurance, which has been dramatic.

Overall, 2013 was a quiet hurricane season and tornado year in the United States. Minnesota’s extreme weather in 2013 was enough to boost us near the top of the nation for catastrophic losses. We are proud to be number one in in many things in Minnesota, but extreme weather damage claims are not on that list.

The bigger and still unanswered question may be this: Is our changing climate placing Minnesota at higher risk for damaging extreme weather than other parts of the nation?

According to the numbers and analysis by people like Bob Johnson, the answer may be yes.

  • Starquest

    I fully expect insurance companies to either (A) stop covering hail losses or (B) require a special rider or add-on, and it will be expensive.

    Also, the Insurance Federation of Minnesota is a lobbyist group. Their opinion on the matter should be taken as such.