Drilling-triggered earthquakes causes “huge demand” for coverage, insurer says

Drilling-triggered earthquakes causes “huge demand” for coverage, insurer says | Insurance Business

Drilling-triggered earthquakes causes “huge demand” for coverage, insurer says
Oklahoma insurance agents may finally start selling earthquake insurance policies in significant numbers.

In the wake of a United States Geological Survey report calling the state “one of the most seismic places on the planet,” residents are beginning to explore their coverage options, regional insurers have said.

The assessment from the group centered on oil-and-gas operations that are believed to have set off manmade earthquakes during the past five years. Experts believe the chance of a particularly destructive quake in north-central Oklahoma and southern Kansas within the next year is as great as it is in the most active parts of California.

“By including human-induced events, our assessment of earthquake hazards has significantly increased in parts of the US,” said Mark Petersen, chief of the agency’s Natural Seismic Hazard Mapping Project.

Now, the agency estimates that about 7 million people live in areas at risk of a human-induced earthquake, the majority in Oklahoma and Texas. In fact, Oklahoma now ranks behind only Alaska in earthquake frequency, followed by California.

And insurance agents may be able to make some of them customers.

Oklahoma City-based Midlands Management recently described what it says has been “unprecedented demand for earthquake insurance/coverage.” These policies are proving particularly popular because they do not require a waiting period after seismic events.

“We have worked closely with state officials to gain awareness and confidence in our earthquake coverage,” said Jack Coleman, Vice President for Midlands. “Fracking and drilling have caused many people a lot of fear and concern as the majority of carriers exclude manmade earthquakes. Midlands covers all types of seismic events.”

Demand has spread into Texas, New Mexico and Kansas as well as Oklahoma, the insurer said.

And the need for coverage is not likely to diminish in the future. A number of seismologists say that even if all disposal activity is stopped, the tremors could still manifest for years to come.