Concerns that insurers will head out of the state as quakes become more common has sparked the need for consumer protection.
Over the last handful of years, earthquakes have become increasingly common in Oklahoma, and there is a growing concern that insurance companies could start to leave the state if they find the risk associated with doing business there to be too high.
Scares of quakes are causing lawmakers to consider the possibility of a worst-case scenario in Oklahoma.
The purpose is to put a bill into place that would make it possible to know that consumers will have protection available to them, even if insurance companies decide that the risk is too large and leave the state. State Bill 1947 has been introduced by State Senator Clark Jolley (Edmond), in order to provide the commissioner’s office with the authority it would require if insurers were to flee Oklahoma.
The state is afraid that insurance companies will stop seeing Oklahoma as a profitable opportunity.
Oklahoma Insurance Commissioner John Doak explained that “If Oklahoma was, at a time of need, to be able to create an earthquake authority if by chance the competitive market was to collapse.” He also added that “We’re nowhere near that. We have more than 100 markets in the state of Oklahoma.”
According to the insurance commissioner, it is very important for lawmakers to be proactive in the way they approach this issue, and to keep discussions open with regards to the best ways to make certain that the residents of Oklahoma will have the protection options they need.
The bill has been designed to reflect what has been put into place by the California Earthquake Authority (CEA). That company is a privately funded nonprofit that is publicly managed. The CEA was first created after the Northridge earthquake in 1994. Its purpose was to provide consumers with protection after several insurance providers chose to cease their offering of earthquake insurance in that market.
Doak did point out that, as of yet, the way that an Oklahoma authority would receive its funding to protect against the exit of earthquake insurance companies, in that state, has not yet entered into the discussion.