Climbing Insurance Premiums: Understanding the Evolving Insurance Landscape

By Commissioner Glen Mulready

Throughout the country, consumers are experiencing higher premiums in all lines of insurance that are hitting the consumer’s pocketbooks quite hard. I get phone calls, emails and on occasion the harsh social media comment that I am doing nothing to prevent higher premiums in Oklahoma.  I thought sharing some key information could help explain this current situation.

The Oklahoma Insurance Department (OID) holds a vital position in the oversight of insurer rate filings, particularly in the Property & Casualty (P&C) lines of insurance. As consumers navigate the complex world of insurance premiums, it is crucial to shed light on our rate review process, its limitations, and the importance of empowering consumers in today’s evolving insurance landscape.

We can first look at the transparency and regulatory framework. Our Rate and Form Division, operating under its statutory authority, is responsible for thoroughly reviewing insurer rate filings. The provisions outlined in Title 36 of the Oklahoma Statutes define competitive and noncompetitive markets, establish rate-making standards, and lay out filing requirements. Currently, Oklahoma operates within a competitive market, which mandates insurers to submit rates and supplementary rating information.

Next is the evaluation of rate changes. Our primary focus is assessing whether insurers’ rate changes align with their actuarial indications. In cases where deviations arise, we seek clarification from the companies to understand the rationale behind these alterations. In a competitive market, rates can only be disapproved if they are deemed to be inadequate or unfairly discriminatory, not based on being excessively high.

You may be thinking that the real problem may be the limited authority we have over the rates in Oklahoma. The only way we can expand that authority over rates is if a market is declared to be “noncompetitive” through a public hearing process that requires compelling evidence. Given the multitude of insurers and rate variations in markets like Homeowners (HO), where 120 insurers are active, and Private Passenger Auto (PPA), 125 active insurers, declaring one of these as noncompetitive would not be an option.

For Oklahoma consumers facing unexpectedly high renewal premiums, the OID advises shopping around for alternative coverage options. Consumers can obtain quotes from different carriers by reaching out to other insurers or independent agents. However, it is crucial to compare policies accurately by ensuring the same coverages, limits, and other factors are considered. This approach takes advantage of the rate variation in the market and can potentially (and often does) result in cost savings.

In an evolving insurance landscape, it is crucial to foster consumer empowerment and encourage a competitive free market that benefits all stakeholders. Despite limitations, OID plays a critical role in ensuring rates are not inadequate or unfairly discriminatory. By actively exploring alternative insurance options, consumers can exercise their right to make informed choices and potentially reduce their insurance costs.