Oklahoma's weather makes the state a tough market for insurers. Ice storms, hail storms, tornados, and most recently earthquakes, make this a challenging and expensive arena for insurance providers. Catastrophic, insured property losses topped a historic $1 billion in Oklahoma in recent years due to an onslaught of natural disasters, according to estimates.
That's one reason Oklahoma's average homeowner's premium has been ranked as bad as fifth-highest in the nation, according to the National Association of Insurance Commissioners. It's also a reason smaller insurers have left the state. In April, GHS Property and Casualty Co. announced its withdrawal from the Oklahoma auto insurance market, becoming the second company to reduce its exposure in the state in six months.
The same thing holds true for crop insurance. National Crop Insurance Services, citing data from the Risk Management Agency, rates Oklahoma among the top three states with the biggest insurance crop losses. Crop insurance companies paid out $2.15 for every $1 in insurance bought in Oklahoma in 2011. Our neighbor to the south, Texas, ranked second-worst, while Vermont took the top spot due to Hurricane Irene.
Across the country, National Crop Insurance Services reports losses paid out by crop insurance companies to farmers for 2011 crops have now exceeded $10.7 billion, far surpassing the 2008 record of $8.76 billion.
Last year's drought was devastating for Oklahoma farmers and ranchers, significantly driving down harvest yields and leaving the state with the smallest beef herd since the 1950s. Now, higher crop insurance prices may also be on the way.
They say farmers tend to live their lives hanging on, hoping, and praying for rain. To boost future crops and lower insurance rates, those prayers may need to include an appeal to the Almighty for mild weather for a few seasons.