MOLINE, Ill. — Although the Quad Cities have not experienced the devastation many are facing in the South during hurricane season, these natural disasters could impact insurance prices miles away.
Bankrate reports Illinois and Iowa ranked 19 and 20 as states with the highest homeowners' insurance. The company said national home insurance rates are up 23% since January 2023. Jim Jones is a professor at Illinois State University and he says two main factors impact price changes when a natural disaster or accident occurs.
"It's either due to the frequency changing, or the severity of the financial impact changing...or a combination of the two," Jones said. "Basically that's how insurance companies price the risk that they take (by) what is their expected loss...that's changing now in this new risk landscape."
Jones said the combination of higher building prices and the increase in tornadoes, hail and wildfires has impacted rates.
"We have a growing number of these convective storms. You know, that affects property prices here in the Midwest," he said.
However, Jones said storms, such as recent hurricanes in the South and on the East Coast, could have a bigger impact in the area than one might think.
"Almost all insurance companies have to go out and purchase reinsurance, which is basically insurance for insurance companies," he said. "So a reinsurer for a company here in Illinois might be one that insured homes in Lahaina, or are reinsuring the insurance companies who have homes in Florida or North Carolina," he said.
As consumers face day-to-day cost increases, Jones said reducing risk might be a way to lower the money coming out of consumers' pockets.
“A lot of insurers are saying we need to do something going forward. We need to do something to reduce the risk that policy holders are paying," Jones said.