Although Wisconsin enjoys some of the nation's lowest homeowner's insurance premium rates, it's not immune to the homeowners insurance market changes being experienced by most of the country. Premiums are increasing and insurers are tightening their underwriting standards. These changes in the homeowners insurance market can be attributed to a lackluster performance in investment markets and more than usual natural disasters recently.

Over the last several years, the U.S. has been experiencing an unusual number of natural disasters resulting in many more claims made to homeowner's insurers. Think of the damage caused by the wildfires in the West, the hailstorms in the Mountain States, the tornadoes in the Midwest, and the hurricanes and tropical storms along the coasts. While some natural disasters occur each year, it seems that over the last several years, they have been more severe, more frequent and occurring at odd times. Very severe tornadoes went through Kentucky, Tennessee, Indiana, and Ohio in November. Tornado season is usually long past by mid-November. (Wisconsin, too, has experienced an increasing number of severe storms; the Ladysmith tornado over Labor Day, the tornado in Siren and the windstorm in Manitowoc and Sheboygan counties, just to name a few.)

Insurers invest the premium dollars they collect to pay for future claims, so investment income is another important component of an insurer's ability to pay claims. The below-normal performance of their investment portfolios coupled with increased claim activity has resulted in many homeowner's insurers raising premium rates and tightening underwriting standards.

What can informed insurance consumers do in this kind of a market? The first thing to do is check with an insurance agent to see if the premium can be lowered by increasing the deductible. Nowadays, a $50 or $100 deductible on homeowner's insurance may not make sense. Think about the main reason for homeowner's insurance--protection from catastrophic events. Raising that deductible to $250, $500 or even $1,000, if they can afford it, should save consumers more in premium than the amount of rate increase with the current deductible. Don't be afraid to check around with other carriers for lower rates. There are more than 200 insurance companies that provide homeowner's insurance in Wisconsin. Check with an agent--or several agents--go on-line and check some insurance Internet sites, and go to the OCI Web site and read the homeowner's brochure for buying tips and some rate comparisons. Price should not be the only criterion, although it certainly should be considered. A company's claims handling and policyholder service are also important criteria. Consumers can check a company's complaint history with the OCI, too.

For homeowners or renters who have not been renewed by their homeowner's insurer, the law requires the company to tell them at least 60 days prior to the non-renewal date and explain why with reasonable specificity. If the non-renewal reason is for claims experience, they can contact their agent or the company and get more information on what criteria the company used in making its determination. If they're on the margin, they can sometimes convince the company to change its mind. If not, shop around. There are some insurers who see these market conditions as an opportunity in acquiring good customers that some of the larger, national companies have terminated. Some of those are the smaller mutual insurance companies who do business only in Wisconsin or in only certain counties in the state. These companies are perfectly fine, but may be harder to find. Check the local phone book and local insurance agent or agencies to find these companies.

A last resort would be the Wisconsin Insurance Plan (WIP), which provides coverage to homeowners who cannot get coverage in the private market. That coverage is limited and can be quite expensive. WIP coverage can be obtained by contacting an insurance agent who can help with the application process. As stated earlier, the WIP is the insurance of last resort.

In these times, when so many major homeowner's insurance companies are tightening up underwriting standards and raising their rates, it's good to be a smart insurance consumer. If Wisconsinites have insurance problems, they should try to work them out with the company or agent. After that, don't be afraid to shop around and don't hesitate to contact the OCI for help.

For more information about renter's and homeowner's insurance, get the OCI's "Consumer Guide to Homeowner's Insurance" (also available in Spanish). It's available at the OCI Web site at http://oci.wi.gov/pub_list.htm or by writing to OCI, P.O. Box 7873, Madison, WI 53707-7873. Contact the OCI toll-free at 1-800-236-8517 or by electronic mail at ociinformation@wisconsin.gov.

By Guenther Ruch, Administrator
Division of Regulation and Enforcement
Office of the Commissioner of Insurance