Oklahoma Insurance Commissioner John D. Doak has called for a public hearing next month to get to the bottom of the earthquake insurance industry’s rising rates. The purpose of the hearing is to determine the industry’s level of competitiveness to justify the rate increases.
The hearing will feature data gathered by the Oklahoma Insurance Department. Comments from insurers and consumers will also be tackled during the event.
“This is a proactive move to protect consumers,” explained Doak. 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. There needs to be a valid financial basis for any rate increase and healthy competition that benefits consumers.”
Doak has concerns regarding the competitiveness of earthquake insurance in Oklahoma due to three reasons:
- None of the recent filings have suggested that a rate increase was necessary.
- Multi-line discounts have made it difficult for consumers to switch carriers for a lower price or lower deductible.
- 70% of earthquake insurance policies in the state are sold by a select few companies.
Property and casualty rates observe a “use and file” system under state law. This allows insurers to implement a rate increase before notifying the Oklahoma Insurance Department. If the line of business is not considered competitive enough, the rating laws revert to a “prior approval” system wherein rates must first be filed and approved before they can be used.
