Home insurance rates in Oklahoma are wildly distorted

As a warming planet delivers more wildfires, hurricanes, and other threats, America’s once reliably boring home insurance market has become the place where climate shocks collide with people’s pocketbooks. 

The turmoil in insurance markets is a harbinger for an American economy that is built on real property. Without insurance, banks won’t issue a mortgage; without a mortgage, most people can’t buy a home. Communities that are deemed too dangerous to insure face the risk of falling property values, which means less tax dollars for schools, police and other basic services.                  

Oklahoma is now estimated to have the highest average cost of homeowners insurance in the United States. One recent analysis found Oklahomans pay an average of $6,210 per year. 

The national average for homeowners insurance, by the way, is $2,110 a year, according to the NerdWallet analysis. That means Oklahomans are paying 194% more than other American homeowners. The online site, which provides financial resources, said it looked at pricing data from over 100 insurance companies to calculate the average insurance cost. They looked at quotes for a 40-year-old that had good credit and needed $300,000 in both dwelling and liability coverage and who wanted a $1,000 deductible.

Enid has an unhappy distinction of being the place in Oklahoma where insurance is more costly than pretty much everywhere else in America.

Enid is certainly not a place that is unusually subject to severe weather. In fact, the federal government designates Garfield County, which includes Enid, as having a “relatively low” level of risk. Yet as the New York Times reported last year, as a percentage of home prices, insurance is more expensive in sections of Enid, than it was in a wildfire-ravaged area of California, the hurricane-prone New Orleans and Florida Keys, and North Carolina’s Outer Banks, which is grappling with homes sinking into the sea.

That same New York Times article cited federal data which showed that Oklahomans who live along the borders paid premiums 70% higher compared to residents living just over the state line in Arkansas, Kansas and Texas. Those counties had comparable exposure risks to natural disasters.                

It’s clear that climate change has increasingly produced damaging weather which can account, at least in part, for the drastic increase in home insurance, but there’s another reason that could explain Oklahoma’s skyrocketing costs. 

Recent research points to a surprising factor: Higher premiums are charged in states, like Oklahoma, where regulators are more lax in examining requests for rate increases. That means in Oklahoma insurers are basically able to charge whatever they want.

Glen Mulready, Oklahoma’s current insurance commissioner, has never once blocked an insurers’ rate increase request. In defending this position, he told The New York Times last year that it’s not his job to stop private insurance companies from raising rates. His belief is that competitive market forces, not regulation, is the best way to limit prices. 

It should be noted that from 2019 to 2022 Mulready received over $60,000 in political contributions from the insurance industry, according to an analysis by the nonpartisan group Open Secrets, which analyzes donor data. Those are the same folks he is supposed to regulate. Most of use would view this as a clear conflict of interest.

Ishita Sen, a professor at Harvard Business School, has found in her research that insurers do not adjust rates in highly-regulated states but rather compensate by raising them in less-regulated states. 

In a tightly regulated state, such as California, premiums tend to be priced below what they would be if they truly reflected the likelihood of damage from storms, fires or other disasters. She also discovered that after big losses in strongly regulated states, national insurance companies tend to raise rates in states with weaker rules. 

Oklahoma homeowners are effectively subsidizing homeowners in California and other states that have stricter rules governing insurance premiums.

This is one reason why it’s important for Oklahomans to think carefully when choosing our state’s next insurance commissioner when the post is next up for election in 2026. If Oklahomans are fed up with having higher premiums than the rest of the country, perhaps they should determine whether a candidate will act in the public interest.