Reuters: Insurance Companies Limit Exposure as Oklahoma Earthquakes Soar
Insurance companies moved to limit their exposure as Oklahoma’s earthquake rate exploded, according to an investigation by Reuters.
Examining thousands of pages of documents from the Oklahoma Insurance Commission, reporter Luc Cohen found the efforts by nearly a dozen insurance companies “often occurred at the expense of homeowners”:
Even as they insured more and more properties against earthquakes in the past two years, six insurers hiked premiums by as much as 260 percent and three increased deductibles. Three companies stopped writing new earthquake insurance altogether, state regulatory filings obtained by Reuters show. Several insurers took more than one of those steps.
Oklahoma’s earthquake boom has been linked to disposal wells operated by the oil and gas industry, which, Reuters reports, insurers are prepared to sue “for reimbursement in instances where they would have to pay damages to homeowners, according to several sources, including two insurance company officials.”
Insurers were worried that the surge in small quakes was evidence that a “big one” could occur in coming years. In response, companies hiked premiums and preventing policyholders from adding earthquake coverage, Reuters reports:
Risk modelers fear that insurers are too exposed in the event of a “big one,” even though claims have been few thus far. If they do end up with substantial claims for a large quake, insurers could sue the oil companies for reimbursement. At the Oklahoma insurance regulator’s request, several insurance companies clarified last fall that they did cover man-made quakes, which provided an incentive to try to recoup payouts from oil and gas companies.
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