New Report Looks at Earthquake Claim Denials in States like OklahomaPosted January 5, 2017
According to a new report released recently by the Federal Insurance Office, only 8 percent of earthquake damage claims filed in Oklahoma were paid in 2014. Why are so many Americans who purchase these earthquake damage policies having their claims denied? According to Bloomberg News, it’s because most of these policies only cover “naturally-occurring” earthquakes–not those due to what many scientists now believe are caused by oil and gas exploration and production activities–and this is causing regulators to raise eyebrows.
Oklahoma’s insurance commissioner is now questioning the scientific underpinning for many of these claim denials, identifying what appears to be an “extraordinary denial rate of earthquake claims.” This must be particularly frustrating for many families, given that increased earthquake activity is exactly what led them to purchase earthquake insurance in the first place. The report ultimately concluded that state insurance regulators should require that insurers make their coverage limitations clearer to consumers in states like Oklahoma, which are (theoretically) especially at risk for human-induced earthquakes.
Claim Denials Entirely Dependent upon Unsubstantiated Information
Oklahoma Insurance Commissioner John D. Doak is especially concerned that the insurance companies are citing a reason that has not yet reached scientific consensus or certainty concerning the connection between fracking and injection wells and earthquakes. In doing so, the companies could be denying claims based on unsupported beliefs, which could be both illegal and unethical.
State Regulation & Areas of Concern
Historically, the business of insurance has always mainly been regulated at the state level. The state legislature passes the laws and state insurance regulators enforce them. These include consumer protection laws, which can cover the price of premiums, advertising, standards for policies, privacy protection, etc.
Of concern to Federal Insurance Office, amongst others, is the fact that the number of earthquakes in the central United States has increased dramatically in the past few years, with a record high of close to 700 of a magnitude level three or higher in 2014 alone. Home and business owners typically have to purchase separate insurance in order to ensure that they are covered for damage caused by earthquakes, as the standard property insurance policies typically exclude this kind of coverage.
In addition to the issue of insurance-related issues posed by human-induced earthquakes, this recent report also considers the appropriateness of using such demographic information such as gender and marital status in underwriting non-health insurance policies, as well as the transparency of homeowners’ insurance coverage, insurers’ increasing reliance on non-standardized coverage forms, and the use of arbitration clauses in insurance policies.
Contact Us Today
An insurer’s failure to deal honestly with policyholders is unfair and unlawful. If you have been the victim of an insurance company’s bad faith claim denial, it is crucial that you contact an experienced bad faith insurance attorney who can defend you. Contact a member of our experienced legal team at the Bennett Law Firm today for a free consultation, (405) 272-0303.