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New Earthquake Coverage Carrier Enters Oklahoma Market

Source: A.M. Best

Posted on 14 Nov 2011

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In the wake of several earthquakes in Oklahoma that are believed to be among the most powerful in the state's history, the Oklahoma Department of Insurance announced that a new company has been approved to write commercial earthquake insurance.

Van Wagoner Cos., a managing general agency based in Texas, will begin selling monoline commercial earthquake insurance as a surplus line in Oklahoma. Van Wagoner's earthquake insurance will be available in Oklahoma through selected independent agents.

Brian Dakota, a spokesman for Van Wagoner, said his company began considering the prospect of writing that kind of earthquake insurance after speaking with department officials at a recent insurance industry gathering as part of the department's "Open for Business" initiative, which is designed to lower premiums by increasing the number of insurance companies competing for business in Oklahoma.

"They approached us with the idea of offering monoline coverage in Oklahoma, and we went back to the team at Lloyd's of London, who developed a program to make it happen," Dakota said. "We decided this was an area where we could craft a program to meet the specific needs of our customers."

Dakota said since crafting the monoline commercial earthquake insurance, Van Wagoner and Lloyd's have created a homeowners program as well.

Both the homeowners and commercial earthquake coverage that Van Wagoner now offers through Lloyd's have seen "much more interest among consumers" since a series of earthquakes hit the state.

Recently, the state has felt the effects of a 5.6 magnitude quake and another that registered a 5.9 on the Richter magnitude scale.

In an recent interview, Insurance Commissioner John Doak told Best's News Service that while the damage has been relatively limited at this point -- with just 40 to 50 homeowners reporting damage to their property -- because the quakes appear to be becoming increasingly powerful, his office has been getting "far more calls than usual from people asking about earthquake insurance."

Other writers of earthquake insurance in the state said they have also seen much more interest in that line of coverage since the temblors hit. Jeff Davis, a spokesman for State Farm, said so far the claims that have been reported to his company have been "negligible," but State Farm agents have seen an increased number of calls from homeowners interested in purchasing earthquake insurance.

"We're under a moratorium right now, so we've been giving out a lot of information about that line of coverage," Davis said. "I would expect that after the moratorium is lifted, we will see a lot more business in that area".

The top five writers of earthquake insurance in Oklahoma in 2010, according to BestLink, were Travelers Group, which had a market share of 41.54%; American International Group, with 13.14%; State Farm Group, with 11.74%; Liberty Mutual Insurance Companies, with 4.39%; and Farmers Insurance Group, with 4.04%.