How the Home Insurance Market Became So Disrupted

The patterns revealed by those data, which my colleague Mira Rojanasakul and I explore in detail in our paper, are striking. I traveled to Enid, Okla., where insurance costs more as a percentage of home value than in New Orleans, much of which is below sea level. Homes in Enid also cost more to insure as a percentage of home value than those in extremely fire-prone areas of California or on North Carolina’s Outer Banks, where homes have been sinking into the sea.

There can be a big difference in rates, even between states that are next to each other. In McCurtain County, Okla., for example, the average homeowner paid an average of $2,837 for insurance last year. But in Little River County, Ark., in the same area with the same weather just across the state line, the average homeowner paid $1,673.

“Families with the same level of risk exposure are paying vastly different amounts to protect themselves from harm,” Dr. Keys told us. “Different prices for the same risk feel unfair.”

It’s worth emphasizing the importance of home insurance. Without home insurance, a bank won’t give you a mortgage; without a mortgage, most people can’t buy a home. And as climate change worsens, more homes are damaged or destroyed by disasters. Without adequate home insurance, most people have no way to pay for rebuilding. So the cost of home insurance is a climate story — and an economic story, and a social justice story.

As Mira and I discovered, the price of home insurance is also a political story.

Much of the variation in insurance costs across the country reflects decisions made by state officials. They have the power to approve or block increases in insurance rates. But not all states use that power equally. Some, like California, make it harder for insurers to raise rates; others, like Oklahoma, are reluctant to get in the way of the free market.