Earthquake Insurance Rates a Concern in Oklahoma

Concerned about a lack of competition in the state’s earthquake insurance market, Oklahoma Insurance Commissioner John Doak has set a public hearing to investigate rising rates. The May 24 hearing will include data gathered by the Oklahoma Insurance Department, as well as comments from insurers and the public.

Doak said his agency has “seen some rate increase filings up to 100 percent come through the office and we want to make sure we have a reasonably competitive market. There needs to be a valid financial basis for any rate increase and healthy competition that benefits consumers.”

Oklahoma operates under a “use and file” system of setting property and casualty rates, where insurers may implement a rate increase then notify the insurance department after the fact. However, if the line of business is not competitive a “prior approval” system is used, under which rates must be filed and approved first.

Competitiveness Concerns

The aim of the hearing is to determine whether there is a reasonable degree of competition in the Oklahoma earthquake insurance market. According to the department:

• Recent filings have not substantiated the need for increased rates.
• The prevalence of multi-line discounts makes it difficult for a consumer to switch carriers to get a lower price or a lower deductible on earthquake insurance.
• 70 percent of earthquake policies in Oklahoma are sold by just a few companies.

To be considered at the hearing:

• The number of insurers actively writing coverage
• Market share information
• Economic barriers that could prevent new carriers from entering the market
• Market concentration
• Whether long-term profitability for insurers in the market is reasonable
• The relationship between insurers’ costs and revenue

The hearing will be held at the Oklahoma Insurance Department in Oklahoma City at 8:00 a.m. on May 24.

Topics Catastrophe Carriers Natural Disasters Oklahoma