Oklahoma Commissioner Deems Earthquake Coverage ‘Non-Competitive’

Oklahoma’s top insurance regulator says there’s a definite lack of competition in the state’s earthquake insurance market and has ordered insurers to change the way they file rates for the coverage in the state.

Commissioner John D. Doak’s order comes on the heels of a public hearing held in late May to examine the availability and affordability of earthquake coverage in the state. Consumers have complained of rising rates, and a Reuters report showed that some insurers had increased rates and/or deductibles, and that some were leaving the market altogether.

The order states that some insurers have filed to “increase the cost and decrease the availability of earthquake coverage,” but the commissioner said they “have not substantiated their need for increased rates based on objective criteria.”

The commissioner’s order requires insurers offering earthquake policies to “file and use” rate changes, meaning the rates are subject to a challenge by the commissioner if they are found to be inappropriate. Under normal circumstances, insurers in Oklahoma may implement rate changes under a “use and file” system; they can make rate changes and then file those modifications with the insurance department.

“There needs to be a valid basis for any rate increase,” Doak said.