In light of the recent increase in earthquake activity across Oklahoma, insurance commissioner John Doak said that the premium rate increases proposed by some of the region’s insurers are perfectly legal.
Doak told local station KOCO News 5
in an interview that the increases are legal, as Oklahoma is a “use and file state.” This means that insurers are allowed to use new rates even before receiving approval from regulators.
The news segment quoted a report by Reuters that found that six insurers operating in the state are proposing rate increases by as much as 260%.
While insurers are allowed to use their new rates without the need for initial approval, the state regulator and consumers alike still have the final say on whether or not the changes can be finalized. Doak mentioned that a public hearing on May 14 would allow consumers the opportunity to voice their feedback on the rate hikes, giving the agency much needed information to determine if the increases are justified.
“Those rates are really something we’re going to take close scrutiny at,” the commissioner said.
Regarding the astronomical earthquake deductibles, Doak said that the state can do little to affect them, as they are set nationwide and increase accordingly in times of catastrophe.
“The earthquake deductibles are really set nationwide ,” he remarked during the interview. “Earthquake coverage is catastrophic coverage, and the way that it’s priced is typically between a 2% to 10% deductible, and that’s on the value of the home.”
Doak gave an example case, wherein a $100,000 home on a 2% deductible would end up with $2,000. He underscored that the values could go up, especially following disasters such as earthquakes.
The insurance commissioner urged consumers to check their policies, as well as the terms and conditions of those policies, to see if earthquake coverage is added. While rates are still increasing, consumers must determine for themselves if purchasing insurance with earthquake coverage is a “good business decision.”
“[If] you can withstand to lose your home due to an earthquake, for any particular reason, then you’re self-insuring. . . I still think [earthquake coverage] is something Oklahomans need to have,” he stated.
Doak believes the current series of low frequency earthquakes is a prelude to an even stronger tremor, such as the one that hit Lincoln County a couple of years ago.