A bill introduced in the Oklahoma legislative session seeks to implement a state-level earthquake reinsurance program modeled after that of California’s.
S.B. 1497 was endorsed by Sen. Clark Jolley, R-Edmond. If approved, it would authorize the state’s elected insurance commissioner to create a semi-government reinsurance entity to assume losses in the state property insurers in the state could suffer after a destructive earthquake.
Jolley asserted that the bill is necessary due to his fear that the state’s insurance market could suffer more than just a minor disruption following a tremor.
On the surface, the bill’s proposal looks no different than the California Earthquake Authority (CEA). Just like the CEA, Oklahoma’s program entails a statutorily created entity that is privately funded. Yet the CEA is primarily a coordinating body where participating carriers sell primary earthquake policies through.
Oklahoma’s proposed reinsurance program, however, involves creating a public reinsurer to offer earthquake protection to the insurance industry.
There are opinions that say creating a government-controlled reinsurance entity would be largely redundant, especially when private risk-transfer prices are currently at record lows.
