Newspaper article THE JOURNAL RECORD

Shaken into Insuring: Tremors Create Instant Demand in Oklahoma's Limited Earthquake Policy Market

Newspaper article THE JOURNAL RECORD

Shaken into Insuring: Tremors Create Instant Demand in Oklahoma's Limited Earthquake Policy Market

Article excerpt

Last weekend's series of 4- and 5-point central Oklahoma earthquakes created an instant market for that specialized insurance policy - but consumers may have a difficult time filling that need.

"The phone here is ringing off the hook," said Glenn Craven, communications officer for the Oklahoma Department of Insurance. "I'm smack in the middle of one call when the next comes in."

But only a fraction of insurers serving Oklahoma deal in what could potentially be a frighteningly expensive payout.

Insurance Department records indicate only about 40 insurers write earthquake insurance in Oklahoma, out of the 90-plus domestic insurance companies and 1,500-plus foreign companies the department regulates.

That list includes some giants, like State Farm, and some very small specialty firms. Craven said the list has remained somewhat more stable than Oklahoma's sediment. While the Oklahoma Geological Survey recorded 1,047 earthquakes in Oklahoma last year - many times over the yearly average, although 90 percent of those tremors were small - Craven said the list of coverage providers has stayed around that 40 mark, with 39 in 2009, 41 last year.

That stability reflects to some degree the lack of demand before Saturday. Fewer than 1 percent of Oklahoma homeowners carry an earthquake policy or "endorsement" with their standard homeowners insurance, according to Dan Ramsey, head of the Independent Insurance Agents of Oklahoma.

State Farm spokesperson Gary Stevenson said only 6 percent of that company's roughly 240,000 Oklahoma homeowner policy holders have earthquake coverage.

Craven projected state insurance agents "definitely should see an increase in demand, or at least inquiry." Stevenson agreed, although it was too early to estimate how much.

Those who inquire at State Farm agencies will also find the product off the table for a month.

"The thing that has occurred here with State Farm - and I don't know the exact level for other insurers, but it might be occurring there as well - but any time we have an earthquake of 5.0 or higher on the Richter scale, State Farm has an automatic moratorium on writing additional insurance coverage for 30 days," said Stevenson in a telephone interview. "There's a 30-day waiting period."

He compared that common business practice to stopping sales of tropical storm policies once a storm is forecast to strike a particular area. Saturday evening's 5.6-point quake had a similar effect.

"At 5.0, when that happens, there is a moratorium for a minimum of 30 days," he said. "We're in that period now in most of Oklahoma."

That provides a nice cooling-off period for buyers, assuming another earthquake doesn't come around to shake things up again. The Associated Press said the U.S. Geological Survey recorded at least five more tremors by midday Monday, the strongest a 3. …

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