Report: Oklahoma’s changing climate is largely to blame for insurance troubles

The committee launched an investigation into homeowner insurance markets nationwide in November 2023 following a series of hearings on such financial issues in coastal and wildfire-prone communities.

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The report indicates the congressional committee expected to find certain states at major risk of insurance collapse, including hurricane-prone Florida and Texas.

Data from a couple of states, including Oklahoma, may have come as a surprise to the lawmakers, according to the report’s findings.

“Land-locked Oklahoma has not typically been on the radar of most analyses as a state at high risk of insurance collapse — but it ranked 7 of 10 by non-renewal rate in 2023 and 5th among states with the highest growth in non-renewal rate from 2018 through 2023,” the December document states.

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The state is on the frontline of wildfire risk, the report says, and its high winds and hail are also leading to higher premiums and cancellations. As of 2023, Caddo, Jackson, Seminole, Choctaw, Hughes, Beckham and McCurtain Counties are some of the highest in the nation for non-renewal rates in areas with at least 1,000 policies in force.

Insurance companies are raising rates or pulling back from high risk areas, Janet Yellen, U.S. secretary of the treasury, said in 2023. 

Farmers Insurance announced in September it planned to cancel policies for about 1,300 homeowners in eastern Oklahoma this year.

The country’s rising cost of insurance and policy cancellations are “predicted to cascade into plunging property values in communities where insurance becomes impossible to find or prohibitively expensive — a collapse in property values with the potential to trigger a full-scale financial crisis similar to what occurred in 2008,” the report states.

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The committee sent letters to 41 U.S. insurers in 2023 and received data used in its analysis from 21 of the companies.

“No matter how the data is analyzed, the bottom line is unequivocal: across the United States, there is a clear correlation between non-renewal rate and climate risk,” the report states. “Additionally, areas with the highest climate risk also saw the largest increases in non-renewals from 2018 through 2023.”

“In other words, states and counties with greater climate risk also have higher non-renewal rates.”

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