Fires, hail mean a rise in insurance rates

Insurance companies doing business in Colorado have significantly raised homeowner’s insurance premiums in response to a series of expensive disasters last year including the devastating High Park Fire.

Colorado hail storms and wildfires led insurers to raise premiums by percentages in the double digits, people in the insurance industry say.

Dylan Kantzler, broker-owner of Fort Collins Insurance Agency, said he has seen homeowner’s insurance premiums rise from 5 to 25 percent.

Kantzler, who sells policies for a variety of companies, believes premiums won’t let up for at least another year. “We’re going to be entering this hard market,” he said. “I don’t see premiums going down anywhere until we hit a soft market again.”

American Family Insurance, for one, filed with the state of Colorado for an increase of 12.3 percent in November.

As devastating as the wildfires were, hail storms played the largest role in the increase, a company spokesman said. But even then, American Family expects to ultimately pay $50 million in wildfire claims alone. Much of those claims stemmed from the Waldo Canyon fire in Colorado Springs and the High Park fire west of Fort Collins.

“We’ve seen a growing trend of those types of events,” he said about storms and natural disasters.

In June, the company paid a total of $267 million in claims. Storms accounted for most of the claims, striking wider areas, leading to damaged roofs and siding on homes.

The rate increase, the company said, is based on anticipated future claims rather than trying to recoup losses from past years.

Homeowner’s insurance claim costs have risen rapidly since 1997, according to a recent report from the Insurance Research Council. The annual average homeowner’s insurance claim payment per home has risen from $229 in 1997 to $626 in 2011.

That’s an annualized increase of 7.4 percent.

“Insurance regulators face stark choices as rapidly rising claim costs create strong pressures on insurance premium rates,” the report says.

Colorado has moved into the top 10 states for catastrophic property claims, with an average 41 percent of claims coming from natural disasters between 1997 and 2011.

In 2012, Colorado saw its most costly and devastating wildfire season, which led companies to pay nearly $450 million in claims.

Insurance costs for the nearly 850 claims filed for the High Park Fire alone are estimated at $97.1 million. The fire burned 259 homes.

Last year’s big hail storm resulted in $321 million in claims across the Front Range, including Weld and Larimer counties, according to the Rocky Mountain Insurance Information Association.

That was a big storm but weather damage was even bigger in 2009, a year that saw $1.4 billion in insured losses to homes and vehicles. Colorado insurers settled more than 200,000 claims that year.

“In Colorado, hail is still having the biggest impact on what we pay for homeowner’s insurance for most folks on the Front Range,” said Carole Walker, executive director of the insurance information association.

She has seen premium increases mostly in the 10 to 12 percent range, but has spotted some double-digit increases.

“Some people, depending on where they live … they’ll be paying more,” she said. “If they live in a larger square-footage home, if they live in a higher-risk wildfire area, if they have a lot of hail claims.”

Insurance companies now are asking some homeowners in high-risk wildfire areas to take steps to clear brush and trees from around their homes – if they want to keep their policies.

The good news: Colorado still has 200 companies that sell homeowner’s insurance.

“We still have a competitive and stable market,” Walker said.

on Facebook on LinkedIn