Risk analysis could mean stronger property, casualty coverage in Oklahoma

Research requested by Insurance Commissioner John Doak would analyze perils that are specific to Oklahoma, including tornadoes, wind storms, ice, freezing rain, and earthquakes.
by Richard Mize Published: May 20, 2011

“We don't have the tall building exposure” that heavily urbanized areas have, he said, “but we have a lot of rural home exposure.”

Oklahoma Farm Bureau Insurance's exit from the earthquake insurance business was a business decision in a difficult insurance marketplace, Doak said. Farm Bureau sold the coverage as riders to standard property and casualty policies. Doak said earthquake coverage is expensive and difficult to find if not sold as a rider to a standard policy.

Catastrophe bonds?

An example of the kind of research Doak was talking about is a 2005 study by the U.S. Government Accountability Office that studied U.S. and European approaches to providing insurance coverage for natural catastrophes and terrorist attacks.

Among other things, the report analyzed the potential of catastrophe bonds — securities that would be sold by insurers and reinsurers and sold to institutional investors — and tax-deductible reserves to strengthen private-sector insurance capacity.

The industry wasn't then ready for the widespread use of catastrophe bonds, according to the National Association of Mutual Insurance Companies.

by Richard Mize
Real Estate Editor
Real estate editor Richard Mize has edited The Oklahoman's weekly residential real estate section and covered housing, commercial real estate, construction, development, finance and related business since 1999. From 1989 to 1999, he worked...
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