“Uncovering the Distortions in America’s Home Insurance Market: Why Enid, Okla. Pays More Than New Orleans”

Enid, Okla., a town surrounded by farms about 90 minutes north of Oklahoma City, is facing a unique and troubling issue – home insurance costs are disproportionately high compared to home values, making it one of the most expensive places in the country for home insurance relative to risk.

Despite not being the most vulnerable to damaging weather, Enid residents are paying more for insurance relative to home prices than residents in high-risk areas like New Orleans, Paradise, Calif., the Florida Keys, and the Outer Banks of North Carolina. This discrepancy in pricing is a result of a distorted system in America’s home insurance market, where premiums are being charged based on factors other than actual risk.

New research by Benjamin Keys and Philip Mulder from the National Bureau of Economic Research reveals that states with less regulatory scrutiny on rate increases tend to have higher insurance premiums. The average premium across the U.S. jumped 33% between 2020 and 2023, with some homeowners paying more than twice as much for insurance compared to others facing similar risks.

In Enid, where the average homeowner spent $2,113 on home insurance last year, the high costs are taking a toll on residents. Homeowners like Kelsey Keyworth have seen their premiums increase significantly, forcing them to sell their homes and move to rentals. Real estate agents in the area have reported clients selling homes due to rising insurance costs, with buyers settling for smaller houses than planned.

Oklahoma ranks as the sixth-most expensive state for home insurance, with premiums as a share of home value ranking third in the country. The disparities in insurance costs between states with similar risk levels highlight the need for transparency and regulatory oversight in the insurance market.

The rising cost of home insurance is not only a financial burden on homeowners but also a potential threat to the stability of the housing market and the economy. As climate change worsens, insurance costs are expected to rise further, impacting home values and potentially destabilizing real estate markets nationwide.

Efforts to address the distortions in the insurance market include advocating for more transparency in rate-setting and regulatory reforms to ensure fair pricing for homeowners. The Senate Budget Committee has started investigating rising insurance rates and the impact of extreme weather events on the insurance market, highlighting the urgent need for action to address these challenges.

Overall, the issue of high home insurance costs in Enid and across the country is a complex and multifaceted problem that requires a comprehensive and coordinated approach to ensure fair and affordable coverage for all homeowners.