Your Insurance Premium Went Up Again. North Dakota Solved This Problem in 1919.
If you're a homeowner this state, you already know the sting of rising property taxes. You've felt it in your mortgage payment, in your escrow adjustment letter, in that moment when you open your annual statement and think, “Again?”
Property taxes are one of the biggest issues in this election, and a continuous talking point. Some South Dakota homeowners have seen increases of 20% or more. The legislature created an entire task force to study the problem. They came back with 19 proposals. Two became law, and the rest died in debate. (You can see what I think about what they came up with — and what they left on the table — in my last blog.)
But here's what almost nobody in Pierre is talking about: a significant chunk of what feels like a "property tax increase" isn't actually your tax bill going up. It's your insurance premium going up. And for most South Dakota homeowners, those two costs arrive in the same envelope — bundled together in your monthly mortgage payment through escrow.
When your insurance premium climbs, your escrow payment climbs, and your monthly housing cost goes up, even if your property tax rate didn't change at all.
I was thinking about how the state can meaningfully help homeowners with property taxes. The first way is by fully funding education so the funding gap isn’t covered by school districts — and in turn, taxpayers. The second way could be to help homeowners with rising insurance costs. But what would that look like?
What's Happening to South Dakota Homeowners
Over the past seven years, South Dakota's average homeowner's insurance premium has increased by 41% — outpacing the national average of 34% and far exceeding the 24% rise in general inflation over the same period.
A Newsweek report from late 2025 put South Dakota among the states that have seen insurance increases between 40% and 70% in recent years, alongside Nebraska, North Dakota, and several others. National projections show premiums are expected to increase another 8% in both 2026 and 2027.
Right now, the average South Dakota homeowner is paying somewhere between $2,100 and $3,600 a year for coverage, depending on the source and coverage level. For many families in Sioux Falls and the surrounding area, that number is climbing every year — sometimes without a single claim filed.
And a brand-new poll released this week by Climate Power and the Insurance Fairness Project found that 75% of Midwestern homeowners are concerned about rising premiums. Even more striking: 86% say elected officials should be doing more to reduce the cost.
Eighty-six percent. That's not a partisan number. That's nearly everyone.
Why It's Getting Worse
The biggest driver? It probably won’t surprise you to hear that it’s severe weather.
South Dakota sits in one of the most weather-volatile regions in the country. We're in the heart of hail country. We get tornadoes, winter storms, and increasingly unpredictable flooding. Oh, and who can forget the derecho of a few years ago? Minnehaha County regularly ranks among the state's top areas for severe weather claims, and many insurers now apply separate, higher hail deductibles for Minnehaha and Lincoln County properties as standard policy.
The Federal Reserve Bank of Minneapolis has identified catastrophic weather as the primary factor behind premium hikes in the Upper Midwest. Nearly half of the nation's billion-dollar weather disasters in 2023 occurred in the Ninth Federal Reserve District, which includes South Dakota.
From 2001 to 2022, South Dakota farmers received nearly $10 billion in federal crop insurance payouts — ranking third nationally in drought and excess moisture claims, and sixth in hail. That agricultural vulnerability doesn't exist in a vacuum. It's the same weather system hitting your roof.
The poll found that 74% of Midwestern homeowners are concerned that severe weather events will become more frequent in their states over the next five years. And 29% of those surveyed have already been personally impacted by severe weather in the past three years.
This isn't a problem that's going away, I’m afriad. In fact, it's a problem that's accelerating.
What Pierre Has Done (and Hasn't Done)
The legislature's 2026 property tax package — SB 245 — uses higher sales tax revenue to reduce the owner-occupied mill levy for education funding. That's something. The projected relief is 14–22% on property taxes.
But it doesn't touch insurance. Not one provision addresses the premiums that are silently inflating every homeowner's monthly payment. And the mechanism they chose, letting the state sales tax rate rise back from 4.2% to 4.5% in 2027 and redirecting the revenue, means every South Dakotan pays more in sales tax so that homeowners get a break on property taxes. Renters, who are already stretched thin, get nothing.
Meanwhile, 51% of Midwestern homeowners surveyed said they worry insurance costs will affect their ability to keep, sell, or make upgrades to their homes. Over 80% want insurers to clearly disclose what's driving their rates. And 79% want insurance companies required to work with state and local officials to reduce disaster risks.
Those aren't radical positions. Those are common sense. And they're not on anyone's legislative agenda in Pierre.
What North Dakota Figured Out a Century Ago
Here's where I want to introduce an idea that might sound unusual at first — but it's been working next door for over 100 years.
I grew up seeing North Dakota’s big, beautiful state-owned bank in Bismarck. What I didn’t realize was that the Bank of North Dakota, established in 1919, is the only state-owned general-service bank in the United States. It was created by farmers who were tired of sending their money to banks in Minneapolis and New York and getting gouged on interest rates in return. Take the grain co-op model, and apply it to finances. Got it.
The BND doesn't compete with local banks. It partners with them: participating in loans, providing guarantees, buying down interest rates, and expanding the lending capacity of community institutions across the state. It's the legal depository for all state funds, and it uses those deposits to invest back into North Dakota.
And it makes money. Every year. It reported $200.4 million in net income in 2024 and has transferred over $1 billion to North Dakota's general fund over its lifetime. The North Dakota Bankers Association — the private bankers — publicly supports it. They call it a "partner, not a competitor."
Before I hear anyone drop the “s” word — this isn't socialism. It's pragmatism. It's a state deciding that some of its financial infrastructure should work for its people, not just for shareholders in another state.
So What’s South Dakota Got to Do with It?
I'm not necessarily proposing we copy-paste the Bank of North Dakota (although the concept is intriguing). But I am proposing we start asking a question that nobody in Pierre seems willing to ask: What if the state played a role in keeping insurance affordable?
That could look like several things worth studying:
A state-backed insurance option that competes with private insurers — not to replace them, but to keep rates honest and ensure coverage stays available even as private companies pull back from weather-volatile markets. This is already happening in states like Florida and California, where insurers of last resort have become essential.
A state fund — modeled on the BND's approach — that partners with private insurers to absorb some catastrophic risk, keeping premiums lower for individual homeowners.
State investment in disaster mitigation that actually reduces claims: incentives for impact-resistant roofing, community storm infrastructure, and building code improvements that lower long-term costs for everyone.
Transparency requirements so homeowners can see exactly what's driving their premiums up — and hold insurers accountable.
These aren't fringe ideas. The polling shows that Midwestern voters overwhelmingly support this kind of accountability and innovation. What's missing is the political will — and, dare I say, imagination — to act on it.
This Is a Property Tax Issue
I want to bring this full circle. When candidates talk about property tax relief — and they all do, because it polls well — please ask them this: What's your plan for insurance?
Because you can cut the mill levy all you want. If insurance premiums keep climbing 8% a year, your monthly mortgage payment is still going up. The relief gets eaten alive.
Real property tax relief means looking at the whole cost of homeownership — not just the line item that says "tax." It means being honest about what's driving costs. And it means being willing to consider solutions that don't start and end with "cut taxes and hope for the best." (I’m looking at you, Toby “I’m going to eliminate property tax” Doeden.)
North Dakota farmers asked these questions over a hundred years ago. Then they built an institution that has returned over a billion dollars to their state while strengthening — not replacing — their private banking system.
South Dakota can be that creative. We just need leaders who are willing to try.
