Bill would require state review of home insurance rate increases

OKLAHOMA CITY — A bill that would require a change in how insurance companies go about raising premiums paid by homeowners appears to be the only measure still being discussed at the Capitol that could potentially help to reduce consumer costs.

House Bill 3781 proposes to require insurers to submit proposed rate changes to the Oklahoma insurance commissioner for review before applying them to customer bills. Under current law, companies are allowed to start applying higher bills in advance of notifying the insurance department of a change. That's justified, proponents of the policy have said, because a competitive insurance market exists in the state.

"Oklahoma, like a number of other states, is a real believer in a free market, whether for insurance or peanut butter," Insurance Commissioner Glen Mulready said. "With enough competition, the free market will establish proper pricing levels."

Consumer advocates and others have countered that Oklahoma homeowners have been subjected to rate increases that haven't been justified. Some believe that a handful of large insurance companies have raised rates unreasonably either to pad profits or to cover their losses in other states.

According to an analysis by the online firm LendingTree, bills paid by Oklahomans for home insurance are the highest in the country, averaging about $6,133 per year. While rates across the United States have increased in recent years, the analysis reflects that they jumped by more than 50% in Oklahoma between 2019 and 2024, ranking the state as the 15th highest for increases.

It has been estimated that as many as 1 in 8 Oklahoma homeowners have dropped insurance because they believe it's no longer affordable.

Mulready said he understands the frustration, but he rejects the notion that insurers have chosen simply to raise rates inordinately in Oklahoma. He said evidence shows the premiums that they've taken in from homeowners in recent years have not been enough to keep pace with payouts they've had to make on claims filed within the state.

The insurance commissioner said passage of HB 3781 could be a good thing, as it would provide some assurance to consumers that their rates are subject to review. However, he expressed doubt that it might have the effect of driving rates down.

"I'm not opposed to it. I'm just concerned that people will think it may lead to immediate changes," he said.

Mulready said he is convinced that market conditions will continue to dictate home insurance costs in the future.

Simply put, HB 3781 proposes to change property and casualty insurance rate filings from a "use-and-file" system to a "file-and-wait" system. If it passes into law, insurers would be required to notify the insurance commissioner of plans for rate changes at least 60 days before they would be allowed to take effect. The commissioner would then review the filings. Any rates determined to be excessive for the coverage provided would be subject to disapproval. Additionally, the commissioner would be allowed to terminate any insurance practices considered to be unfair or unreasonable.

The measure would repeal a provision in state law that currently makes such review by the insurance commissioner's office contingent on a lack of competitiveness being found in the market.

"This bill does not set prices, and it does not interfere with the free market," said HB 3781 author Rep. Stacy Jo Adams, R-Duncan. "Insurance companies will still be able to charge rates that are actuarially sound and justified by risk. What this bill does is bring transparency to the process."

Adams said Oklahoma homeowners are fully justified in asking questions about how their premium costs are set and why they've risen higher in recent years.

"Oklahomans deserve to understand what is driving these insurance increases and to know that rates are based on real data, not just timing or process," she said. "In a competitive market, transparency builds trust, and if rate increases are justified, then showing the work should not be a problem."

HB 3781 passed through the House on an 81-14 vote. It has advanced for consideration in the Senate, where it will be carried by Sen. Aaron Reinhardt, R-Jenks.