Hearing set for rates on earthquake insurance
Oklahoma Insurance Commissioner John Doak has ordered a public hearing to investigate a rise in earthquake insurance rates in the state.
A few insurers have filed rate increases of up to 100 percent for earthquake insurance in the state, Doak said in an interview.
“This is a proactive consumer measure,” Doak said. “We’ve had a lot of consumers get rate increases. We don’t know really what is justifying them.”
Kelly Dexter, a spokeswoman for the Insurance Department, said the companies that have filed for rate increases are not public yet because the increases have not taken effect. However, some consumers already may have received letters from their insurers notifying them of the pending increase.
Under Oklahoma law, property and casualty rates adhere to the “use and file” system. Under that system, insurers may implement a rate increase then notify the Oklahoma Insurance Department after the fact.
However, if the line of business is not competitive, the rating laws revert to a “prior approval” system. Under a “prior approval” system, rates must be filed and approved before they can be used.
According to the Insurance Information Institute, sales of earthquake insurance measured in terms of premiums written rose 294 percent in Oklahoma from 2009 through 2015. During that period, earthquakes have become more frequent in Oklahoma than any other state.
If you go
The hearing will be 8 to 10 a.m. May 24 at the state Insurance Department, 3625 NW 56, Suite 100.
Anyone who wishes to be heard must notify the Insurance Department in advance by emailing General Counsel Gordon Amini at Gordon.Amini@oid.ok.gov no later than May 17.
The hearing will include data gathered by the Insurance Department, as well as comments from insurers and residents.
Doak said he has concerns about the competitiveness of earthquake insurance because recent filings have not substantiated the need for increased rates.
The prevalence of multiline discounts makes it difficult for a consumer to switch carriers to get a lower price or a lower deductible on earthquake insurance.
According to the agency, 70 percent of earthquake insurance policies in Oklahoma are sold by just a few companies.
During the hearing, Doak plans to consider the number of insurers actively writing coverage; market share information; economic barriers that could prevent new carriers from entering the market; market concentration and whether long-term profitability for insurers in the market is reasonable.
The hearing also will examine the relationship between insurers’ costs and revenue.
“I am responsible for making sure consumers are protected and that insurers are financially solvent,” Doak said.
“Gathering this data helps me accomplish both goals.”