Too little, too late, too weak: Critics react to proposed insurance legislation

Instead, the proposals announced Dec. 10 seek to expand Oklahoma's fortified roof program and require insurance companies to cover roofs that are not too old or worn out, presumably to address the types of wind and hail damage that have become a flashpoint in Oklahoma. In addition, the proposals call for shorter response times from companies on claim acknowledgement and decisions and propose a not yet detailed homeowners bill of rights.

Most troubling to critics, the proposals seek to impose new obstacles to policyholders suing insurance companies, on the claim that litigation costs translate to rate increases. Rep. Mark Tedford, R-Jenks, and Sen. Aaron Reinhardt, R-Jenks, in a press release, laid blame for rate hikes on attorneys' fees in lawsuits rather than the peculiarities of Oklahoma law that permit insurers to raise rates without scrutiny.

Tedford, who in November acknowledged that there had been discussions among politicians about modifying the problematic Property and Casualty Loss Cost Rating Act that governs homeowners insurance, confirmed that the Insurance Department had specifically requested that the law not be altered.

Now writing bills for the upcoming legislative session based on the department's requests, Tedford expressed preference for third-party adjusters to settle claim disputes.

"I really don't like litigation in a property claim," Tedford said. "In my opinion, when there's litigation it drags the claim out, adding costs to both sides."

Oklahoma Insurance Department Commissioner Glen Mulready did not respond to an interview request.

Skepticism Over Legal Reforms

Last month, Tulsa Police Lt. Billy Hursh, one of hundreds of State Farm policyholders who have taken legal action after being denied a claim on roof damage, became the public face of the effort to fight back against against what Attorney General Gentner Drummond described, in a Dec. 4 petition to intervene in Hursh's case, as racketeering in the insurance industry.

Hursh was nonplussed at the proposed new laws.

"Some of it seems encouraging, but the parts about tort reform are concerning," Hursh said. "Preventing attorney's fees from being awarded seems like it would make it harder for regular people to bring litigation against insurance companies. Most people don't have room in their budgets to pay for attorney fees. Insurance companies definitely do."

The amount of money insurance companies spend on litigation is not publicly available, but spending on lobbying is: from 2014-2023, U.S. insurance companies spent an average $130 million annually.

Hursh had doubts about whether the proposed changes would address the challenges Oklahomans are now facing.

"I'm also really skeptical that what they're calling frivolous lawsuits have anything to do with insurance companies charging us more and cheating us on our policies," Hursh said.

The proposals are too little, too late and too weak, said Robert Hunter, former commissioner of the Texas Department of Insurance and for decades a leading expert on policyholder protections with the Consumer Federation of America.

"Let's reduce the consumer's ability to get an attorney and fight abusive claim practices," Hunter said, making no effort to mask sarcasm in characterizing the proposed changes. "Also, let's speed up the denials. And thank you so much for letting me get my own inspection at my own cost."

For Hunter, the department's proposal signals anxiety at the enthusiasm for substantive change that has been growing across Oklahoma for months.

"You can smell the fear that generated these weak proposals," Hunter said. "'Oh, my gosh, they're on to us. What can we offer to stop the real reform that is coming?'"

Hunter called for remedies to what he characterized as long-standing industry wrongdoing.

"Where are the significant penalties for these abuses?" Hunter said. "Where are the fines? Where are the criminal charges?"

Drummond's press secretary, Leslie Berger, said in a written statement that the office of the attorney general would continue to hold accountable insurance companies that break the law. Berger addressed the proposed laws only obliquely.

"We welcome efforts to address rising homeowners insurance costs and consumer protection through legislation," Berger said. "We look forward to seeing the legislation and how it can help consumers in the future."

A Definition of Competition

Senate Minority Leader Julia Kirt, D-Oklahoma City, who mounted an interim study on homeowners insurance in October, joined the chorus of voices lamenting the proposed laws' focus on constricting the rights of policyholders seeking justice.

"I'm concerned about these bills limiting Oklahomans' right to get justice through lawsuits," Kirt said. "I've talked to many people who have had to turn to the courts because insurance companies would not honor their contracts."

Kirt has previously called for profit caps for insurance companies and a precise definition of competition codified in Oklahoma law. She praised consumer protections included in the package but lamented the omission of measures that would directly address affordability.

"I appreciate any work to improve consumer protections for people buying insurance, but I refuse to accept that state law can't make insurance more affordable," Kirt said. "We know it can, and that's what I'll be working on this session."

Rep. Andy Fugate, D-Del City, who mounted a separate interim study on homeowners insurance in the House of Representatives, echoed the praise of certain reforms but noted that the proposed barriers to taking legal action conflicted with testimony that Mulready gave during Fugate's study. Mulready admitted that Oklahoma does not have a lawsuit problem, Fugate said.

Like Kirt, Fugate lamented that the proposals did not directly address rate controls.

"A fundamental missing piece is restoring the power of the insurance commissioner to ensure rates are supported by actuarial data," Fugate said, referring to a portion of the Property and Casualty Loss Cost Rating Act. "Without that, Oklahoma rates will remain among the highest in the nation."

"Oklahoma Families Deserve More"

Oklahoma Watch contacted the four candidates who have launched campaigns to replace Mulready, who is term-limited and cannot run for reelection.

The candidates include Chris Merideth, a legislative affairs specialist with Farmers Insurance Co.; Marty Quinn, former chairman of the Senate insurance committee with 40 years of industry experience; Greta Shuler, a 10-year veteran of the insurance industry and a Shawnee city commissioner; and Bob Sullivan, a 20-year veteran of the insurance industry specializing in property and casualty insurance.

Merideth, Sullivan and Shuler responded.

In offering praise for a call for a homeowners bill of rights and for discounts for fortified construction, Merideth lauded the groundwork of the proposals but said that Oklahoma must go further to address rising premiums, claim decision confusion and inconsistent standards that affect homeowners across the state.

A registered lobbyist for Farmers Insurance from 2016 to 2023, Merideth called for movement in a new direction.

"Oklahoma can't afford a reactive approach to insurance anymore," Merideth said. "We need proactive leadership, clear statewide standards, and a long-term resiliency strategy that lowers costs and strengthens our communities."

Sullivan described the proposals as a solid starting point, and praised the legislative process for permitting discussion and refinement of ideas.

"I will be watching closely and hope to engage significantly on the campaign trail," Sullivan said. "We must make insurance fair again in Oklahoma."

Shuler repeated qualified praise of the proposals while pivoting to indicate the complete absence of any suggestion of changes to health care law. In particular, Shuler called attention to a lack of oversight of medical decision-making processes that may result in insurers inserting themselves between patients and their doctors.

Of the department proposals, Shuler spoke as a homeowner who has herself experienced a total loss due to an Oklahoma tornado.

"We need stronger protections to ensure insurers meet their obligations, pay claims promptly, and treat Oklahomans with the respect they deserve during the hardest moments of their lives," Shuler said. "These consumer-first reforms are still missing from this agenda, and I believe Oklahoma families deserve more."

Ongoing Efforts

The Insurance Department press release said that the proposals announced on Dec. 10 are the result of cooperation with numerous interested parties.

"Insurance Commissioner Glen Mulready emphasized that the proposals reflect ongoing efforts to collaborate with lawmakers, industry stakeholders, and consumer advocates," the release reads.

Tedford said that he would welcome additional input from policyholders as the composition of legislation continues, adding that he expects to hear from insurance companies, the agent community, and advocates for tort reform.

"I would love to hear from consumer advocacy groups," Tedford said. "I want to have a system where everybody wins, where the policyholder is treated fairly on their claims."

The OID can be reached at its Oklahoma City and Tulsa offices, at 405-521-2828 and 918-295-3700, respectively.

Ed. Note: This story is part of a series on property insurance in Oklahoma.

JC Hallman covers general assignments for Oklahoma Watch. Reach him at jchallman@oklahomawatch.org.