Minneapolis Fed Finds Minnesota Auto Insurance Premiums Surged 29% Through 2024, Now Falling Faster Than Other States

The Minneapolis Fed's senior writer Tu-Uyen Tran pinned the spike on three forces: billion-dollar hail storms in the Twin Cities, repair shop labor costs that ran four times the national pace, and statistical models that left insurers scrambling to rebuild reserves after the worst underwriting year in three decades.

For Minnesota drivers paying around $1,975 a year for full coverage according to Bankrate's March 2026 data, the Fed report explains why premiums climbed so steeply and signals that the worst of the surge is behind them. Drivers who haven't shopped a renewal in 12 months are sitting on the largest year-over-year rate drop in the Ninth Federal Reserve District.

What the Minneapolis Fed Report Found

Tran's analysis pulled premium data from the National Association of Insurance Commissioners and adjusted it for the number of insured vehicles in each state. That adjustment matters because raw premium totals climb whenever more cars get insured, masking the actual price change per driver.

Once the vehicle-count adjustment was applied, Minnesota landed at a 29% increase between 2022 and 2024. South Dakota, North Dakota, Wisconsin, Montana, and Michigan, the other Ninth District states, all posted smaller increases. The national average came in at 27%.

"These are all the things that stack up as far as the risks that insurers have to evaluate to get to the premium that you and I pay," Aaron Cocking, president and CEO of the Insurance Federation of Minnesota, told the Fed.

The 2023 combined average premium jump nationwide hit 14%, the largest single-year increase in nearly 40 years, according to NAIC. Minnesota's combined premium rose 15% the same year, edging the country.

Source: Minneapolis Fed analysis of NAIC and Insurify data. Insurify quotes reflect one year of coverage for drivers ages 20 to 70 with clean records and average or better credit. The 2022-2024 premium change is adjusted by the change in liability-insured vehicles, with 2024 figures projected from recent-year averages.

How Minnesota Compares to Other Ninth District States

The Fed's first chart laid out a stark contrast. Minnesota's 29% increase towered over the 9-percentage-point range posted by the other Ninth District states. Wisconsin drivers, who pay around $1,902 annually for full coverage according to the Wisconsin car insurance market, saw a much milder premium increase over the same period.

State	2022-2024 Premium Change	2025-2026 YoY Quote Change	Region
Minnesota	+29%	-11%	9th District
National Average	+27%	-6%	US
Wisconsin	Below average	Largest decline	9th District
South Dakota	Below average	Declining	9th District
North Dakota	Below average	Not specified	9th District
Montana	Below average	Not specified	9th District
Michigan	Below average	Not specified	9th District

Source: Federal Reserve Bank of Minneapolis (May 27, 2026), using NAIC premium data and Insurify quote data. The Ninth Federal Reserve District covers Minnesota, Wisconsin, South Dakota, North Dakota, Montana, and Michigan's Upper Peninsula.

Billion-Dollar Hail Storms Drove Comprehensive Claims

The National Weather Service counted 581 severe hail storms in Minnesota in 2022. That is nearly twice the 10-year average of 301, and the count stayed elevated at 350 in 2023.

Two of the 2022 storms hit the Twin Cities metro and surrounding areas, causing more than $5 billion in damage according to the Minnesota Department of Natural Resources. A 2023 hail storm added at least $1.5 billion in damage to the Twin Cities tally.

The geography of those storms compounded the financial hit. The Twin Cities metro houses nearly 60% of all motor vehicles registered in Minnesota. A single hail storm hitting the metro damages proportionally far more cars than a comparable storm in states where population spreads across multiple metros.

Comprehensive coverage, which pays for hail and other non-collision damage, became the single biggest driver of Minnesota's 2023 premium jump. That pattern stood out across the Ninth District. In every other state, liability coverage led the increases. Only South Dakota came close to Minnesota's comprehensive-driven surge, after a 2022 derecho caused roughly $2.8 billion in damage across multiple states including the Sioux Falls metro.

Repair Costs and Body Shop Wages Spiked Faster in Minnesota

Collision coverage tells a separate story. Crash rates have stayed relatively low since the pandemic, but repair costs climbed sharply because of pandemic-era supply chain disruptions and labor shortages. The average collision claim rose 19% nationwide in 2021 and another 18% in 2022, per NAIC data cited in the Fed report.

Minnesota outpaced both years. Repair costs in the state grew 23% in 2021 and 19% in 2022. The Fed pointed to labor as a key reason. According to the Bureau of Labor Statistics, wages for Minnesota body shop workers rose 16% year over year in 2021. Nationwide, body shop wages rose only 4% over the same period.

Drivers in Minneapolis pay roughly $141 per month for full coverage according to MoneyGeek's 2026 rate analysis, the most expensive of any major Minnesota city. St. Paul averages $139, while Duluth comes in at $98 and Rochester at $101 per month.

Insurers Suffered Worst Underwriting Year in 30 Years

The premium spike was not pure profit-taking. NAIC data showed 2022 was the worst underwriting year for auto insurers in at least three decades. The national underwriting loss averaged 12% of premium income. In Minnesota, it averaged 16%, the eighth highest among states. The industry has since recovered, with AM Best reporting auto rate hikes slowed to 3.7% in 2025 as carriers returned to profitability.

Phillip Vigliaturo, an actuary with the Minnesota Department of Commerce, told the Fed that insurers do not simply pass through past losses. They use statistical models to forecast future costs based on past events, then set rates that aim to cover those forecasted costs plus a profit margin. The catch is that anomalies typically get excluded from rate-setting, since they are assumed to be over before new rates take effect.

One academic analysis cited in the report suggested insurers initially treated the 2022 repair cost spike as a temporary anomaly. By the time models incorporated the increase as a lasting pattern, reserves were already depleted, requiring sharper catch-up rate hikes in 2023.

Why Rates Are Now Falling Faster in Minnesota

Minnesota's 11% year-over-year quote decline through March 2026 nearly doubles the 6% national drop. Two factors explain the gap.

First, Minnesota premiums spiked higher in the first place, giving insurers more room to cut as cost inputs normalize. Second, consumer shopping has accelerated. J.D. Power's 2025 insurance shopping study documented record shopping activity, pressuring carriers to compete on price.

Minnesota also has a regulatory backstop. State law requires public hearings on auto insurance rate increases exceeding 25% in any 12-month period. Regulatory filings cited by the Fed show the threat of those hearings has caused insurers to scale back proposed hikes during the surge years.

What Minnesota Drivers Should Do Now

Minnesota's softening market gives drivers leverage they did not have during the 2022-2024 surge. The window matters because carriers tend to slow rate cuts once shopping activity tapers.

What to Watch Next

The Fed report is balanced, noting that premiums are coming down but warning that quote levels remain well above pre-surge prices. Three signals will determine whether the current rate softening continues into late 2026 and 2027.

Watch the 2026 storm season. Minnesota's billion-dollar storms in 2022 and 2023 set the comprehensive coverage premium spike. A quiet hail season would let carriers continue cutting rates; another major storm cluster would force them to rebuild reserves again. Coastal drivers face a parallel weather-rate dynamic, as covered in our 2026 hurricane season auto insurance preparation guide.

Watch repair cost inflation. The Fed cited Minneapolis Fed analysis from 2023 showing repair costs continued rising even as broader inflation eased. NAIC's 2024 and 2025 collision claim data, expected to publish in late 2026, will reveal whether the trend has finally normalized.

Watch regulatory filings. Minnesota Department of Commerce posts rate filings publicly. Insurers can lawfully decrease rates without public hearings, but they often delay reductions when forecasts allow. Filings posted in the second half of 2026 will signal whether the 11% decline continues.

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