The data from Keys and Mulder of the National Bureau of Economic Research in 2024 highlights a concerning trend in Enid, Okla. where home insurance costs are disproportionately high compared to home values. Despite not being the most vulnerable to damaging weather, parts of Enid have higher insurance costs relative to home prices than even areas like New Orleans, Paradise, Calif., the Florida Keys, and the Outer Banks of North Carolina.
This discrepancy in home insurance pricing across the country is attributed to various factors, including fewer homeowners in rural states to share risk and varying rates of insurance fraud. The analysis also shows that states with less regulatory scrutiny on rate increases tend to have higher premiums compared to states with more oversight.
The research by Keys and Mulder sheds light on the increasing distortion in America’s home insurance market due to rising premiums that are not always aligned with actual risk. The study, which utilized data from CoreLogic, reveals that the average premium for home insurance jumped by 33 percent between 2020 and 2023, with some homeowners paying more than twice as much for insurance compared to others facing similar levels of risk.
The study also underscores the impact of climate risk on insurance pricing, noting that factors like home value and geographic location play a significant role in determining premiums. This disparity in pricing has led to affordability challenges for homeowners in high-cost areas like Enid, where insurance premiums can make home ownership unattainable.
Overall, the study by Keys and Mulder provides valuable insights into the complex relationship between risk exposure, home insurance pricing, and regulatory oversight in the United States. The data highlights the need for more transparency and fairness in the home insurance market to ensure that homeowners are adequately protected without facing financial burdens.