When California voters passed Proposition 103 in 1988, the logic seemed irresistible: require insurers to justify rate increases and get state approval before charging more. Thirty-seven years later, California is confronting the catastrophic consequences of that well-intentioned decision — a market in freefall, seven of its top twelve home insurers having restricted or exited the state, and a last-resort insurer of record, the FAIR Plan, whose exposure has tripled to $458 billion while holding just $200 million in cash. This week, Oklahoma signed a law that takes a meaningful step in the same direction.
Governor Kevin Stitt last week signed House Bill 3781 into law, moving Oklahoma from a use-and-file system — under which insurers could raise rates immediately and notify the state afterward — to a file-and-wait system that gives the state prior review and approval authority over rate changes. Starting July 1, 2027, insurers operating in competitive markets must file proposed increases 30 days before their effective date, with competitive supplementary data. For non-competitive markets, the waiting period is 60 days. The new law allows Oklahoma Insurance Commissioner Glen Mulready to review filings, request actuarial data when rates appear excessive, and post proposed increases publicly on the department's website for personal auto, homeowners multi-peril, and dwelling fire policies.
The legislation, introduced by Representative Dell Adams, passed with bipartisan support and was cheered by consumer advocates as a long-overdue check on an industry that has imposed double-digit premium increases on Oklahoma homeowners for several consecutive years. As Insurance Business has reported, Oklahoma now has some of the highest average homeowners' premiums in the United States, with rates rising sharply on the back of severe convective storms, inflation, and higher reinsurance costs — with double-digit increases continuing into 2025, well above both wage growth and broader inflation.
#2 Oklahoma ranks second most expensive state for home insurance in the US, behind only Florida, according to Insurify data published by Insurance Business.
July 2027 When Oklahoma's new file-and-wait rate approval system takes effect under House Bill 3781 signed by Gov. Stitt.
There is a notable dissonance at the heart of this story. Oklahoma Insurance Commissioner Glen Mulready, whose department will administer the new law, told POLITICO's E&E News that his office did not oppose the measure — but that it will not address the underlying forces driving premium increases. "The rates that have been in place, given the experience that we've had in our state, are justified," Mulready said. "We've got to impact that math equation if we're going to impact rates."
That statement from the state's own top regulator deserves more attention than it has received. Mulready is not saying the law is harmful. He is saying it is insufficient — that requiring insurers to justify and await approval for rate increases does nothing to reduce the claims costs, rebuilding expenses, reinsurance outlays, and severe weather frequency that are causing those increases in the first place. The rates, he is telling legislators and consumers, are not arbitrary. They are a reflection of reality.
"We've got to impact that math equation if we're going to impact rates." — Oklahoma Insurance Commissioner Glen Mulready, speaking to POLITICO's E&E News
The concern is not that prior approval regulation is inherently destructive. It is that, under the specific conditions now present in high-risk states — escalating catastrophe losses, rising reinsurance costs, and construction inflation — rate approval systems consistently produce a dynamic that is worse for consumers than the one they were designed to fix.
California's experience illustrates the mechanism precisely. As Insurance Business has reported, prior-approval rules under Proposition 103 can mean it takes a year or more for carriers to secure rate increases — a lag that erodes the value of any approved increase before it takes effect. Rate filings without third-party intervention took an average of 256 days to review in 2024. When consumer group intervenors were involved, the process stretched to 529 days — nearly a year and a half — a sharp departure from the 60-day approval period Proposition 103 originally envisioned.
The result was systematic rate suppression: from 2018 to 2022, California had the largest gap between actuarially appropriate rates and state-approved rates of any state in the nation, according to research by the International Center for Law and Economics. And when insurers cannot charge rates that reflect the risks they carry, the market's response is not to absorb the losses — it is to leave. As Insurance Business has reported, California's FAIR Plan — the state-run insurer of last resort — is now carrying a growing load as private carriers retreat not just from wildfire zones but from areas well beyond them. Commissioner Ricardo Lara has warned that "a structurally healthier market is a 3–5-year project," even after major reforms that began allowing forward-looking catastrophe models and reinsurance cost pass-throughs in rate filings.
California (Prop 103 — since 1988)
Oklahoma (HB 3781 — from July 2027)
Oklahoma is not the only state grappling with this question in 2026. Colorado has been confronting its own property insurance crisis, and its approach offers a deliberate contrast. As Insurance Business has reported, Colorado Insurance Commissioner Michael Conway has explicitly invoked California as a cautionary tale — warning against what he calls "price suppression over risk reduction." Colorado's Governor Polis has pursued an $800 premium-reduction roadmap built around physical risk mitigation: hardening homes, reducing wildfire exposure, and making the state a genuinely better risk for insurers to write — rather than simply constraining what insurers can charge. Colorado's approach focuses on changing what the risk actually costs, not just what insurers can bill for it.
That distinction — between suppressing prices and reducing underlying risk — is precisely the one Oklahoma Commissioner Mulready is drawing when he says the new law will not impact "the math equation." Oklahoma has, in parallel, taken some steps in that direction: the Strengthen Oklahoma Homes Act, signed in 2024, established the OKReady grant program offering up to $10,000 to homeowners who meet Insurance Institute for Business and Home Safety Fortified standards for wind and hail resilience. As Insurance Business has reported, the program began its pilot phase in March 2025. Those investments address the supply side of the cost equation. House Bill 3781 addresses only the political side.
The risk of repeating California's mistake is heightened by several features of Oklahoma's specific insurance market that make it more, not less, vulnerable to the dynamic that has played out on the West Coast.
Oklahoma sits in the heart of Tornado Alley. Its loss history from severe convective storms — tornadoes, hail, high winds — is among the most concentrated of any state in the country. Unlike California's wildfire problem, which is partly a function of land-use decisions and suppression policy that can be addressed over time, Oklahoma's severe weather exposure is essentially structural and largely irreducible in the near term. Reinsurance costs for Oklahoma carriers reflect that reality. As Insurance Business has reported, even as homeowners insurance premium growth cooled nationally in 2025, the underlying drivers — climate and catastrophe risk, rising deductibles, AI-driven property-level reassessments — remain firmly in place, and are expected to persist through 2026, particularly in catastrophe-prone states.
As Insurance Business has reported, Oklahoma is already the second most expensive state for home insurance in the United States — trailing only Florida, a state whose own dysfunctional regulatory history provides another cautionary chapter in what happens when price controls collide with catastrophe risk. If Oklahoma's prior approval system creates delays, suppresses actuarially justified rates, and erodes carrier confidence in the market's profitability, the state could find itself in the same position California finds itself today: trying, at enormous political and financial cost, to coax carriers back into a market from which they have already concluded they cannot make money.
Prior approval regulation does not fail immediately or dramatically. It fails slowly, through a mechanism that plays out over years. Carriers submit rate filings that are delayed, reduced, or tied up in procedural review. Approved increases lag behind rising costs. Combined ratios deteriorate. Carriers quietly stop writing new policies in the most exposed ZIP codes, then pull back further, then exit. Consumers who remain in the market see premiums rise — because there are fewer carriers competing — while those in the highest-risk areas lose access to the private market entirely and shift to state-backed plans that carry less coverage at higher cost. Oklahoma's law does not mandate the exact architecture of Proposition 103. But the fundamental incentive structure — suppressing actuarially justified rate increases — creates the same pressure on the market, regardless of how long the waiting period is or who reviews the filings.
None of this means that Oklahoma's pre-2027 use-and-file system was optimal, or that consumers are wrong to want more transparency and accountability in how premiums are set. The political frustration driving House Bill 3781 is real and legitimate. As Insurance Business has reported, even as the national property insurance market shows signs of stabilization in 2026 — with moderate reinsurance softening and improved loss ratios in many regions — catastrophe-prone states, including those in the Midwest, remain structurally exposed to the pricing pressures that are driving legislative action.
The question is not whether rate review serves any consumer interest. It is whether a review system that can delay or suppress actuarially justified increases will ultimately leave Oklahoma homeowners better or worse off. California's commissioner Ricardo Lara has acknowledged publicly that the state is "not out of the woods" despite years of reform effort. The state's insurance commissioner before him stated plainly that insurers "don't have to be here" — and, under a system that prevented them from pricing risk appropriately, they proved him right by leaving.
Oklahoma Commissioner Mulready's honesty about the limitations of House Bill 3781 is, in one sense, reassuring: the state's top regulator is clear-eyed about what the law can and cannot do. The worry is whether that clarity is shared by the legislators who passed it and the homeowners who will be waiting for it to deliver relief it may be structurally incapable of providing. The math, as Mulready himself has said, is the problem. Prior approval does not change the math. It just controls who gets to write it down — and for how long before someone decides the numbers no longer add up to a viable business.
