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Insurance broker warns Sigourney’s ICAP premium rose about 40% as reinsurance rules reset rates
Summary
An insurance review at the Aug. 7 Sigourney City Council meeting showed the city’s ICAP premium jumped roughly 40% after reinsurers required a higher minimum property rate; the consultant recommended considering a $2,500 deductible and fewer small claims to limit future rate pressure.
Paul Horak of Horak Insurance told the Sigourney City Council on Aug. 7 that the city’s property and liability insurance premiums through the Iowa Communities Assurance Pool have risen roughly 40% after reinsurers demanded a higher minimum property rate across the state. "The increase for the City of Sigourney is right at 40%," Horak said, summarizing a multi-year comparison.
Horak presented the city’s loss runs and policy summaries, saying insured property values rose from about $14.0 million last year to roughly $15.6 million this year. He told council members the ICAP pool had taken in about $207,000 from the city over the last five years while paying out about $238,000 for claims, a pattern he described as unsustainable for the pool.
He outlined options for the city to reduce annual premiums, including increasing the property deductible from the current $500 to $2,500 or to $10,000. Horak noted that a $2,500 deductible could save roughly $2,697 per year and, based on historical claims, might be modestly beneficial over a five-year horizon. By contrast, a $10,000 deductible would save more in premiums but raise the city’s exposure to larger out-of-pocket repairs.
Horak also warned councilors to expect a catastrophic or storm-declared one-percent deductible that many insurers and reinsurers are applying: in a state-declared catastrophe, a one-percent deductible could exceed any fixed deductible level and would apply to building totals. "There is a one percent deductible for catastrophic losses," Horak said, explaining how reinsurance terms can change member exposure.
Council discussion focused on whether small claims should be handled through self-repair where practical to avoid increasing loss history. Council member Iosbaker suggested investigating alternatives to filing small claims and keeping repairs local; Council member Schultz said the projected premium savings from modest deductible increases did not look significant enough to warrant a change.
No further council vote was required on coverage because the city had already approved the premium; the presentation was informational and intended to guide future deductible and claims-handling choices.
