Insurers' Rate Jolts Cause Alarm
St. Paul Pioneer Press
October 2, 2002

Consumers aren't the only ones doing a double take at rising homeowners insurance bills in Minnesota.

The sharp rate increases for virtually all insurance has sparked increased scrutiny by state regulators, and consumer groups are stepping up calls for reform.

In Minnesota, consumers are seeing homeowners insurance rate increases averaging 14 percent, according to the Commerce Department. Many homeowners are seeing rate increases of 20 percent to 25 percent. State Farm, the nation's largest insurer of homes, raised rates an average of 21.6 percent in Minnesota in April and clamped down on writing some new policies.
Others are seeing even higher increases.

Encompass Insurance Co. earlier this year increased homeowners insurance rates in Minnesota by 98.6 percent and 72 percent; its auto insurance rates jumped by 30.4 percent.

Not so fast, state regulators said. The issue recently went before an administrative law judge — the first time a rate request has reached that level in five years — but no resolution has been reached.

. . .

"We suspect there's a lot of overreaching going on right now, and rates are going up far more than they should be or need to be," said Joanne Doroshow, co-founder of the Americans for Insurance Reform, a newly formed coalition of more than 60 consumer groups that advocates stronger regulation.

The group believes major insurance industry reform is needed. It has asked all 50 state insurance commissioners to investigate whether rate increases are justified and, in the interim, freeze medical malpractice and homeowners insurance rates.

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