Hearing on Earthquake Insurance Rate IncreasesPosted May 29, 2016
State Insurance Commissioner John D. Doak has called for a public hearing to investigate the increasing cost of earthquake insurance in Oklahoma. Rates are up throughout Oklahoma and have even doubled in some cases. However, there must be a valid financial basis for increasing insurance rates, and the system must encourage competition for the benefit of consumers. Commissioner Doak has ordered the hearing to analyze whether Oklahoma’s current earthquake insurance rates meet those standards.
Oklahoma Rating Laws
Under Oklahoma law, insurers use a use and file system to set insurance rates. Under this system, if an insurer increases rates, it must notify the Oklahoma Insurance Department of the increase, but notification is only required after the fact. However, Oklahoma law states that if the use and file system does not prove to be competitive, it will revert to a prior approval system. Under prior approval, insurers must file their rates with the Department and receive approval before implementing the rates or any rate hikes.
In a statement, Commissioner Doak expressed concerns about the competitiveness of earthquake insurance in Oklahoma. He noted that recent filings coming through the commissioner’s office have not included evidence of any need for the rate increases and that only a few companies in Oklahoma sell 70 percent of earthquake insurance policies. Further, multi-line discounts make it difficult for customers to switch insurance carriers in order to get better prices or lower deductibles.
During the hearing, Commissioner Doak will consider data from the Oklahoma Insurance Department and comments from citizens and insurers. He will consider issues including:
- The number of insurers currently writing coverage;
- Information regarding market share;
- Any economic barriers preventing new insurers from breaking into the market;
- Market concentration;
- The reasonability of long-term profitability for insurers; and
- The relationship between insurers’ costs and revenue.
The Department is collecting earthquake claims data from 2010 to present to ensure fair claims handling. Comments will be limited to the topics of competition and pricing in the earthquake insurance market. There will be only a limited time for public comment, so those who do not get a chance to speak will be asked to submit written testimony.
The hearing will be held on May 24th, from 8:00 to 10:00 a.m., at the Oklahoma Insurance Department, 3625 NW 56th Street, Suite 100, Oklahoma City.
Contact A Legal Representative
If you have concerns about your insurance rates or how your insurance company is treating you, please contact an experienced Oklahoma bad faith insurance attorney at the Bennett Law Firm, at 405-272-0303, for a free consultation.