OKLAHOMA CITY — Oklahoma lawmakers Tuesday probed why Oklahoma consumers face the highest insurance rates in the nation and what steps they can take to mitigate those soaring costs.
The bipartisan legislative interim study is expected to be the first of two interim studies, digging into why Oklahomans have seen their homeowner’s insurance premiums top $6,100 annually, more than double the national average. Lawmakers often use interim studies to help craft legislation on issues.
The high insurance costs hurt everyone, said Rep. Andy Fugate, D-Oklahoma City, who led the study. Homeowners lose protection, insurance agents lose business and home ownership is harder to attain, he said.
Fugate said he wants to find a way to keep homeowner’s insurance affordable, fair and reliable for Oklahoma families without cutting coverage.
“I’m a big believer in trying to identify a problem in a way that helps other people get on board,” he said. “And it’s great that we have a number of experts who are going to be here today, not the least of which is our (Insurance) Commissioner, to help us kind of dig in and navigate what’s driving the cost and what we might do to mitigate.”
Glen Mulready, Oklahoma’s insurance commissioner, told lawmakers Tuesday that rising homeowner’s insurance costs are not just an Oklahoma problem but a national one.
“When we come together as insurance commissioners from around the country, that is what we are talking about,” Mulready said. “The property insurance problem, specifically homeowners, because it touches so many people, and everybody is dealing with it.”
Severe weather, like Oklahoma’s March wildfires and over 100 tornadoes this year, are part of the reason insurance costs have increased, he said. Every state has different “perils,” like hurricanes or other severe weather events, it has to attempt to mitigate with insurance costs, Mulready said.
But Oklahoma Watch reported that data from the National Oceanic and Atmospheric Administration did not show significant differences in severe weather events between Oklahoma and neighboring states, which have lower insurance costs.
On average, Americans spend 2.4% of their annual income on homeowner’s insurance, but Oklahomans spend over 6.8%, according to Oklahoma Watch. Residents in Arkansas and Texas spend over 4% while Kansans spend 5.5%.
Mulready said Oklahoma’s insurance industry is a competitive marketplace.
Oklahoma’s insurance marketplace has maintained an Herfindahl-Hirschman Index score below 1,200 since at least 2020. A score under 1,500 on the index, which measures competitiveness and compares the size of companies relative to the size of the industry, is indicative of a competitive market, he said.
Oklahoma’s insurance market is a “use and file” state, meaning insurers can immediately use new rates but must file them with the Oklahoma Insurance Department within 30 days.
Other states require prior approval when new rates are filed and must be approved by the state before they’re used or “file and use,” meaning new rates can be immediately implemented while the state reviews them.
For Oklahoma to change the way its homeowner’s insurance rates are regulated, lawmakers would have to approve statutory changes, Mulready said.
He said neighboring states like Texas, which is a “file and use state,” does not have a less competitive market because of its process.
Heather Morton of the National Conference of State Legislatures said other states have begun proposing policies to mitigate rising costs, like state-run insurance plans, disaster relief savings accounts or programs and tax credits to help homeowners fortify their homes.
Oklahoma has already launched a program, Strengthen Oklahoma Homes, to provide grants to some Oklahoma residents for wind and hail mitigation on their homes.
Ward Tisdale, a regional vice president of the National Association of Mutual Insurance Companies, said pressures on the insurance industry, like severe weather from climate change, inflation, regulatory challenges and “legal system abuse,” have contributed to rising costs. The association works to continue education for insurance industry professionals and advocate on their behalf.
The U.S. has experienced over $123 billion in “severe convective storm losses” in 2023-24, Tisdale said. In comparison, the two most costly hurricane seasons in U.S. history were in 2004-05 at $182 billion.
Rep. Preston Stinson, R-Edmond, led the study along with Fugate, but was not present Tuesday. He said in a statement that he believes the Oklahoma Insurance Department is doing the best it can within statute, he wants to explore changes that can bring Oklahoma’s rates closer to neighboring states.
“While the immediate impact of these increases is on home ownership affordability, the ripple effects extend much further,” he said. “Higher insurance costs make it harder to recruit and retain merchant businesses. They add financial pressures that can lead to food insecurity, divert health care and even contribute to domestic violence.”
