Oklahoma earthquake insurance market still shaky

Oklahoma earthquake insurance

Regulators have been attempting to get the explosive marketplace in the state under control.

Oklahoma earthquake insurance is topping the list of regulator struggles in the state. As the market grows at a staggering rate, it has reached a point in which the state is facing an unprecedented risk.

The exponential rise in the frequency of earthquakes has changed the entire nature of the industry in the state.

Not long ago, Oklahoma earthquake insurance was out of the question. There was no reason for it. Over the last few years, the number of tremors has risen tremendously and steadily. Between 2000 and 2008, there were 12 earthquakes of a 3.0 or greater magnitude. Last year alone, there were 890. These figures were provided by the United States Geological Survey.

John Doak, the Oklahoma Department of Insurance Commissioner, said “It’s a fascinating place to be in.” He added: “I believe this is a unique time in Oklahoma history.”

As Oklahoma earthquake insurance becomes increasingly necessary, regulators are scrambling to manage it.

Oklahoma earthquake insuranceOn the whole, the state’s Department of Insurance provides oversight over what is supposed to be a competitive marketplace. Traditionally, it steps back and allows insurance companies to set their own rates, both in terms of raising and lowering them. All insurance companies need to do is provide the department with notification within 30 days of the change. That said, they are not required to seek or obtain approval. In fact, it isn’t unheard of for policyholders to see the changes in their premiums before the department knows it will be happening.

This technique has managed itself in a way the state has considered effective as long as competition was adequate. However, when it comes to the sudden massive demand and requirement for earthquake insurance in Oklahoma, this hasn’t been the case.

Only a handful of companies are selling Oklahoma earthquake insurance, providing inadequate competition. Therefore, consumers can’t simply turn to an alternative with a lower price. Regulators are now scrambling to manage this struggle as policyholders could otherwise see rate increase of as much as 300 percent if the intentions of those insurers are allowed to proceed.

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