Oklahoma insurers and the reinsurers that cover them have become increasingly concerned about their exposure to earthquake risk in recent times, Reuters reported.
The U.S. Geological Survey (USGS) in late March warned that 7 million Americans were at risk of “induced seismicity.” According to the USGS, the number of quakes of magnitude 3.0 and higher recorded in Oklahoma dramatically increased—from only a handful in 2008 to 103 in 2013, and to 890 last year.
Experts believe that the earthquakes are caused by the oil and gas companies operating in the state. These companies have been known to pump wastewater from their mining operations back underground, where they cause tremors.
Documents from the Oklahoma Insurance Commission found that while several insurers have stepped up to the plate and insured more properties against earthquakes in the past two years, six insurers raised their premiums by up 260%, three carriers increased their deductibles, and three companies stopped writing earthquake insurance. Some insurers did a combination of the three in an effort to reduce their exposure to the risk of earthquakes.
Trade group Insurance Information Institute reported that in 2015, the value of coverage surged to $19 million in 2015 from less than $5 million in 2009.
The documents also noted that a couple of insurers have considered filing suit against oil and gas companies for reimbursement.
While risk modelers worry that insurance companies are too exposed—especially if the small quakes culminate in a large, catastrophic tremor—consumer claims have been few so far.
