Rep. Cory Williams presses to require offer of earthquake insurance

OKLAHOMA CITY – An increase in the frequency and intensity of temblors in Oklahoma is cited as the rationale behind legislation that would require all in-state insurance carriers to offer earthquake insurance coverage.

Insurers in Oklahoma would be required to offer earthquake insurance coverage to their customers, under a measure proposed this year by a Payne County legislator.

House Bill 1571 by state Rep. Cory Williams, D-Stillwater, would require all residential property insurance policies issued new or renewed on or after Nov. 1 to offer coverage “for loss caused by the peril of earthquake.” Coverage would be optional, but carriers would be compelled to notify their customers of its availability.

Oklahomans, particularly in the northern and central sectors of the state, have been rattled by a spate of tremors since oil and gas development intensified over the past three or four years.

State and federal geologists counted 5,418 earthquakes throughout Oklahoma last year, ranging in intensity from barely perceptible by seismographs to a magnitude-4.2, Oklahoma Geological Survey data show.

A record 567 of those “quakes” registered magnitude-3 or greater. In comparison, U.S. Geological Survey data reflect that Oklahoma experienced an average of fewer than two magnitude-3 quakes per year for 30 years, from 1978 through 2008.

At least 19 peer-reviewed published seismic reports have concluded that many of the quakes occurring in Oklahoma are man-made, triggered by literally billions of gallons of saltwater and waste water injected into disposal wells associated with horizontal drilling and enhanced recovery drilling methods.

Records maintained by the Oklahoma Corporation Commission indicate 1.088 billion barrels of waste water from oil and gas production were pumped underground into disposal wells in 2012, and 1.1 billion barrels of oil patch fluids were pumped into disposal wells in 2013. 

That two-year total amounted to 91.9 billion gallons – enough to fill 91,900 oceangoing supertankers capable of transporting a million gallons apiece. (A barrel is equivalent to 42 gallons.)

Oklahoma is dotted with approximately 4,500 disposal wells, according to Corporation Commission spokesman Matt Skinner.

Payne County had approximately 6,700 oil and gas wells designated as active, as well as 221 injection wells, Corporation Commission ledgers indicated three months ago. Of the injection wells, six were commercial disposal wells; 74 were enhanced recovery wells, which can include “fracked” wells; and the remainder were waste water disposal wells.

As a companion measure to HB 1571, Williams, a member of the House Committee on Environmental Law, also filed House Bill 1576. That measure would implement the Recycled Waste Water Tax Credit Policy Act, offering energy producers a tax credit for disposing of their wastewater in some acceptable manner other than injecting it underground.

The tremors in Payne County have caused a lot of cosmetic damage and some structural damage, too – for example, three interior walls at the Humane Society of Stillwater annex collapsed shortly after an earthquake July 19 – and the toll on nerves of residents is increasing.

“People are very concerned,” Angela Spotts of Stillwater said recently. “Our houses weren’t built to withstand seismic activity of this intensity and duration.” 

After two earthquakes felt in Payne County in early October last year, Ms. Spotts, who lives near the Payne County Fairgrounds at the eastern edge of Stillwater, said wood trim around the ceiling of her house “pulled away” from the wall, and at least one crack in her house widened.

“My place is in shreds,” said Mark Crismon, a retiree who has lived north of Glencoe on the Payne/Noble county line for 25 years. Seismic activity at his residence started on Nov. 5, 2011, and has continued incessantly ever since, he said. Consequently, Crismon said, he has cracks in his walls, ceilings and foundation.

On Oct. 18 last year, the ground at his residence was shaken for two hours and 20 minutes by no fewer than 52 tremors, he said. Oklahoma State University researchers have installed a sophisticated seismometer in his shop building that sits about 50 yards from his house.

The Oklahoma Geological Survey (OGS) officially logged 594 earthquakes in Payne County last year. They ranged in intensity from virtually imperceptible to all but electronic seismographs, to a magnitude-3.9 on Oct. 10. The county experienced 54 tremors of magnitude-3 or greater, including two quakes of magnitude-3.8 (on Oct. 7 and Nov. 9) and three of magnitude-3.7 (on Jan. 4, Feb. 1 and Dec. 5).

HB 1571 would target insurance policies that cover residential structures of up to four dwelling units, condominiums, manufactured or mobile homes, “or a tenant’s policy insuring personal contents of a residential unit.” Policies for commercial, industrial or business properties, except for structures of four or fewer dwellings, would be excluded from the mandate.

The legislation also would expressly exclude any insurance policy that “does not include loss or damage caused by any peril insured against in a standard fire policy.”

Insurance carriers would be directed to notify their residential customers that a typical homeowners insurance policy “does not cover loss from earthquakes,” and that earthquake insurance coverage “may provide less protection” and “may have exclusions and limitations” that do not appear in a standard homeowners policy.

Earthquake coverage would be optional, not compulsory, H.B. 1571 provides. An insurance carrier could meet the requirements by underwriting “the risk of earthquake loss” directly, by arranging for the coverage to be provided by an affiliated company, or by securing the coverage through a non-affiliated insurer such as Lloyd’s of London.

A customer could terminate an earthquake insurance policy or coverage “at any time,” the legislation stipulates.

An insurance carrier could not reject, cancel or refuse to renew a residential property insurance policy solely because the customer accepted earthquake coverage. Also, residential property insurance underwriting standards “shall not be applied in any discriminatory fashion” against any customer who “accepts or continues earthquake coverage,” the bill decrees.

Williams is the second Oklahoma legislator in two years to propose requiring insurance companies to notify their customers that earthquake coverage is available and optional.

Rep. Mike Shelton, D-Oklahoma City, filed House Bill 3420 last year in an attempt to require insurance carriers to offer earthquake coverage to their residential customers. The measure was assigned to the House Committee on Insurance, where it languished and died.