|
Getting your Trinity Audio player ready...
|
By J.C. Hallman, Oklahoma Watch
Oklahoma Insurance Commissioner Glen Mulready was against it at first, then for it.
On May 20, less than six weeks after he denied a request for a public hearing on whether Oklahoma’s homeowners insurance market is competitive, Mulready announced an identical hearing to be held in September.
In the same announcement, Mulready addressed recent substantive changes to Oklahoma insurance law — already signed by Gov. Kevin Stitt — that directly affect whether the skyrocketing rates that have been crippling Oklahoma homeowners’ budgets for years can be challenged.
The changes in law and the competition hearing are directly related — and the devil is in the details.
Mulready’s announcement reiterated his position that Oklahoma law prevented his office from challenging excessive rates.
“I have shared many times over the past year that there was no authority in our statutes to intervene in filed rates from insurers,” Mulready wrote.
The problem is, that’s not entirely true.
Title 36 stipulates that rates in a competitive market cannot be challenged; however, rates can be challenged after a non-competitive market has been declared.
A non-competitive market is declared through a hearing, after which the declaration of noncompetitiveness rests entirely at the commissioner’s discretion.
Oklahoma law does not specify when a hearing might be called. Mulready’s call for a September hearing comes just six months before the end of his eight-year tenure as commissioner; he has called for no other hearing on competition.
“You’d Need an Aggressive Commissioner”
Scrutiny of Oklahoma’s homeowners market began a little more than a year ago when reporters debunked what had become an article of faith: hailstorms alone explained why Oklahoma had some of the highest homeowners rates in the country.
That Oklahoma Watch investigation revealed that Mulready had been the primary source for a Wall Street Journal article that suggested as much, but the data Mulready supplied to the Journal revealed the opposite: Oklahoma had less hail but higher premiums than both Kansas and Texas.
Mulready backpedaled with another insurance department announcement: “It’s Not Just Hail: A Look Into Oklahoma Homeowners Rates.”
Here, Mulready alluded to the statutory provision that would have enabled him to regulate excessive rates.
“OID has no statutory authority to set or approve homeowners rates except in certain, extraordinary circumstances,” the announcement said.
Oklahoma insurance law makes no reference to extraordinary circumstances.
Subsequent reporting on competitive markets uncovered irregularities in how Oklahoma calculates whether its market is competitive. Oklahoma Watch’s own analysis revealed that, at best, Oklahoma is an oligopoly. That is, a market dominated by a small number of firms whose outsized market share opens the door for non-competitive behavior.
Lawmakers were nonplussed by a package of proposed laws that Mulready put forward for the legislative session that ended in May. Significant portions of that package failed to become law.
By way of contrast, House Bill 3781, authored by Rep. Stacy Jo Adams, R-Duncan, and subsequently championed by a bipartisan collection of lawmakers, sailed through the House and the Senate and was quickly signed into law.
HB 3781, in modifying the portion of Title 36 known as the Property and Casualty Competitive Loss Cost Rating Act, primarily did two things. First, it shifted Oklahoma’s homeowners laws from a use-and-file system, which enabled insurers to implement rate hikes without any scrutiny at all, to a more Texas-style file-and-use system, which requires the insurance department to engage actuaries — insurance accountants — to study rate increases within 30 days of filing to determine whether they are truly necessary.
Second, HB 3781 eliminated the statutory prohibition — hearing or no hearing — on challenging excessive rates.
Veteran federal administrator and longtime insurance consumer advocate J. Robert Hunter, who spoke to Oklahoma legislators at one of two interim studies last fall, praised the changes to Oklahoma law as a small step in the right direction, but warned that there were obstacles embedded in the bill that could make its practical implementation difficult.
Specifically, Hunter said the 30-day window for evaluating rate increases was not sufficient. Furthermore, the requirement of careful actuarial scrutiny was problematic because the Oklahoma Insurance Department, unlike the Texas Insurance Department, does not employ a team of actuaries.
“It does strike the language that made it impossible to challenge excessive rates,” Hunter said. “You do have the opportunity to challenge a rate, but you have only 30 days. That is extremely tight. You’d need a pretty aggressive commissioner to go after it.”
Hunter was also struck by the fact that the new law will not go into effect until July 1, 2027. He speculated that if insurance companies were going to resist implementation of the new law, it could become a political hot potato.
“There’s going to be more fighting over this, on both sides,” Hunter said.
“If the Market is Competitive, Prove It”
On Feb. 24, Bob Sullivan, one of five candidates running for Mulready’s job alongside fellow Republicans Greta Shuler, Marty Quinn, and Chris Meredith, and Democrat Craig MacIntyre, formally requested a hearing on competitiveness in a letter addressed to Mulready.
“I represent Oklahoma policyholders who intend to participate as a party to this proceeding,” Sullivan’s letter read.
A press release issued at the same time struck a firmer tone.
“If the market is competitive, prove it,” Sullivan said. “If it’s not, it’s time for leadership that puts Oklahoma families first.”
Oklahoma law required a response to the request within 30 days. Mulready was two weeks late; his denial of the hearing relied on hair-splitting legal equivocations.
“Mr. Sullivan has not provided any information or evidence sufficient to establish the burden of proof necessary to overcome the presumption of a competitive market,” Mulready’s April 7 decision read.
Six weeks later, on May 20, Mulready flip-flopped and called for a hearing himself.
Mulready refused an interview request regarding his May 20 statement.
Misleading and Dangerously Ignorant
The statement included numerous peculiarities.
After saying he was pleased by statutory changes he never advocated for himself, Mulready criticized plaintiffs’ attorneys who, in recent years, have been winning significant settlements on behalf of policyholders who felt cheated when their insurance companies denied claims.
In January, a poll revealed that 88% of Oklahomans support the right of policyholders to sue insurance companies.
Muready attempted to link litigation costs to the broader affordability crisis.
“We cannot allow excessive litigation to become a business model that drives affordability further out of reach for hardworking Oklahomans,” Mulready wrote.
Oklahoma City plaintiffs attorney Jeff Marr, who has been suing insurance companies for decades, said that blaming Oklahoma policyholders and the lawyers who represent them for rising insurance premiums was both misleading and dangerously ignorant.
“Suggesting that consumers exercising their legal rights are responsible for premium increases shifts the cost of insurer misconduct back onto Oklahoma families,” Marr said. “[That] is not consumer protection. It is protection for insurance companies.”
Although Mulready announced a hearing to determine competitiveness, he also said he already believes the market to be competitive.
“I also stand by my position that we have a competitive market for homeowners insurance coverage,” Mulready wrote.
Mulready said the hearing would feature evidence from as-yet-unnamed parties and result in an opinion from an independent hearing officer — also unnamed — but failed to acknowledge that the ultimate determination of whether the market is competitive would fall to him alone.
“Calling a hearing in which [Mulready] declares the result in advance? Love it,” consumer advocate Hunter said, with a sarcastic harrumph.
The date of the public hearing has not yet been set. If held, and if the public is allowed to speak, the hearing may represent the only opportunity Oklahoma homeowners will have to express frustrations over skyrocketing rates directly to Mulready before he leaves office.
“Oklahoma Watch, at oklahomawatch.org, is a nonprofit, nonpartisan news organization that covers public-policy issues facing the state.”