Regulators: 4 Insurers Hold 55% of the Oklahoma Earthquake Market

At a May 24 hearing on the competitiveness of earthquake insurance coverage in Oklahoma state insurance regulators released data showing four insurance companies hold 55 percent of the market.

That’s a concern for Insurance Commis-sioner John Doak, who called the hearing after carriers increased rates, dropped lower deductible options or stopped writing new earthquake insurance policies.

“Due to several factors, including market concentration and very low loss ratios, I believe the Oklahoma earthquake insurance market may not be competitive. If true, we must take action to protect consumers,” he said.

The Oklahoma Insurance Department summarized the earthquake insurance market as follows:

• 119 companies write earthquake insurance in Oklahoma
• 1,094 earthquake insurance claims were filed from 2010-present; 208 claims, or 19 percent, were paid
• Most claim activity occurred in 2011
• Approximately half of the 208 paid claims resulted in payments less than $5,000
• Insurers collected more than $76 million in earthquake insurance premiums from 2010-2015
• Insurers paid out $4.3 million in claims from 2010-2015
• Current pure direct loss ratio for all earthquake carriers since 2010 is 3 percent
• OID has received 12 rate increase filings ranging from 4 percent to 300 percent since August 2014
• Five companies have stopped writing new business since August 2014.

Property/casualty rates generally are set in Oklahoma using the “use and file” system; insurers may increase a rate and notify the OID after the fact. However, if the line of business is found not to be competitive, insurers must follow a “file and use,” or “prior approval,” system.

Saying the market is competitive, the insurance trade groups Property Casualty Insurers Association of America and the American Insurance Association weighed in against increased regulation.

Topics Catastrophe Natural Disasters Carriers Oklahoma