Wednesday, May 25, 2016

Earthquake insurance latest concern in oil-rich Oklahoma

OKLAHOMA CITY, May 25 (UPI) -- The state government in the shale state of Oklahoma said it was concerned about the lack of competition in the market for earthquake insurance.
Oklahoma Insurance Commissioner John Doak called a hearing after fielding complaints that just four insurance companies claim more than half of the state market for insurance coverage for earthquakes.
Two minor tremors in Oklahoma, along with another small seismic event just north of the border in Kansas, were recorded by the U.S. Geological Survey in the past 24 hours. A March report from the USGS found the disposal of oil and gas-related wastewater is the "primary reason" for the increase in seismic activity in the central United States.
With tremors becoming more frequent, Doak said insurers have started raising their rates, cutting lower deductible plans or halting the issuance of new policies altogether. Since 2010, he said nearly 1,000 insurance claims were filed for earthquake-related issues, though just 19 percent paid out.
As the insurance commissioner, he said his top priority was to protect the citizens of Oklahoma.
"Due to several factors, including market concentration and very low loss ratios, I believe the Oklahoma earthquake insurance market may not be competitive," he said in a statement. "If true, we must take action to protect consumers."
The state attorney general's office said it was backing Doak completely in his efforts to ensure markets are working for the benefit of consumers. Insurers, meanwhile, said an over-regulated market would make matters worse because smaller companies may be forced out.
In remarks sent to the state government, the American Insurance Association said state regulators should mitigate risk by enforcing stronger building codes, helping consumers prepare better for disasters and working harder on identifying the causes of earthquakes and how to reduce them.
"While it is certainly clear that earthquake risk in Oklahoma has changed for the worse over the last several years, data also confirms that the market for earthquake insurance remains both competitive and un-concentrated," AIA said.
Oklahoma Gov. Mary Fallin in January approved $1.38 million in one-time costs to support earthquake research in the state. State energy regulators, meanwhile, have called on energy companies to reduce the amount of wastewater disposed in underground wells in an effort to curb seismic activity.
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