Oklahomans pay $34.7B annually in insurance premiums

Deputy Director of the Oklahoma Insurance Department Mike Rhoads spoke to Grove Rotary and said Oklahomans pay $34.7 billion in premiums each year. There are 1,800 foreign and domestic insurers operating in Oklahoma. The department keeps track of 332,000 insurance licenses.

The agency makes money for the state by collecting 2.25% of all premiums, which earns the agency about $297 million. The budget of the agency is $21 million and so the rest is transferred to the Comptroller to be allocated to by the legislature.

In 2023, about $175 million was transferred to Public Safety pension funds for fire and police, and $21 million was sent to the general fund.

The Insurance Department is a "Use and File State", so the department is not able to disapprove rate increases.

The legislature requires the companies to file the rates but not review them. Some legislatures have given authority to the Insurance Department to approve rates, but Oklahoma is not one of those states.

He noted that vehicle insurance has increased 21% and homeowners' insurance has increased 25% in the past three years. Rhoads pointed to the rising number of claims as well as the cost of materials and labor.

"Make sure you insure as much as you can afford," said Rhoads. "We will be glad to talk to you about it." He urged consumers to look at deductibles and said companies will not write policies less than 80% of market value. He predicted the trend will continue through 2026, and reminded the audience that the agency cannot regulate rates.

Rhoads also reported the department's Consumer Assistance Division handled more than 13,000 phone calls last year resulting in 2,800 complaints being filed. The insurance division recovered $8.2 million for consumers. He also said there were 1,400 fraud inquiries and 26 criminal cases were filed along with license revocations in 2023. He said retired OSBI officers as well as Tulsa and Oklahoma City officers who investigated potential fraud.

Also, there is a Medicare Assistance Program which talks to 23,000 individuals in beneficiary meetings and does nearly 8,600 hours of counseling with seniors to help understand Medicare benefits as well as suggest possible supplements.

Rhoads said there is a division in the Insurance Department that helps fire departments with consultations for ISO surveys to help premium rates. In fact, he was meeting after the Rotary meeting with the Grove Fire Department. The division holds workshops to help fire departments obtain the best ISO rating possible to reduce homeowner premiums.

He pointed out several casualty companies are having issues with solvency. The agency requires 200% of risk-based capital and when companies fall below that threshold they can be taken into conservator or receivership by the agency.

There is also a problem with agents switching carriers without the owner's consent in order to earn commissions.

He pointed to a person who thought they had Blue Cross Blue Shield and when presented their membership card at a hospital found they had been switched to United Health Care.

The department is investigating 800 complaints regarding switches without permission from the owner.

Rhoads said they are also concerned about insurance companies not having enough doctors in their network to serve consumers particularly primary care doctors. The legislature is considering legislation to address this issue.

Another concern is the length of time and the amount of prior authorization of medical procedures.

"There are far too many of those and the legislature passed some legislation that requires approval in a much more timely fashion," he said.

"The legislation requires approval or disapproval within 72 hours." Rhoads also mentioned the number of cyber-attacks on health care hospitals including St. Francis, Hillcrest, and Ascension St. John in Tulsa.

Rhoads has been with the Oklahoma Health Department for 14 years and has 40 years of insurance experience, along with 10 years of banking experience.