Insurance Commissioner John D. Doak said Tuesday the Oklahoma earthquake insurance market is "noncompetitive" and has ordered changes in how insurers file their rates with his department.
“There needs to be a valid basis for any rate increase,” Doak said. “My job is to protect Oklahomans, and this change will ensure earthquake coverage remains available and affordable.”
A public hearing was held last month to discuss the rise in earthquake insurance rates and the availability of suitable earthquake insurance coverage for Oklahoma consumers.
In calling for the May hearing, Doak said his office had seen some substantial rate increase filings.
“We’ve seen some rate increase filings up to 100 percent come through the office, and we want to make sure we have a reasonably competitive market," Doak said. "There needs to be a valid financial basis for any rate increase and healthy competition that benefits consumers.”
During the hearing, data was released on the competitiveness of the earthquake insurance market. Doak said he found a reasonable degree of competition does not exist in the market andconsumers have a limited ability to shop for a competitive price.
Because of the findings, Doak issued the order that requires property and casualty insurers to file their earthquake insurance rates before using them.
Prior to the order, insurance companies followed the “use and file” system that is required in a competitive market. Under the “use and file” system, an insurer can use any rate so long as it filed the rate with the Insurance Department within 30 days after implementation. Since Doak found the earthquake insurance market “noncompetitive,” the rating laws revert to a “file and use” system. In this type of system, rate increases must be submitted to the Insurance Department before they can be used.
Doak has the option to challenge any rate change he finds to be inappropriate.
“This change will ultimately protect Oklahomans and help our state’s earthquake insurance market to become competitive,” Doak said. “A competitive market is healthy for the growth and sustainability of Oklahoma insurance needs.”
The order takes effect immediately. It will not affect existing policies until their renewal. Anyone with questions about earthquake insurance, can call Oklahoma Insurance Department at (800) 522-0071 or go online to oid.ok.gov.