When you consider who is most like likely to benefit from earthquake insurance you might immediately think of the west coast – the 38 million people straddling the 1,303 kilometre-long San Andreas fault in California that has been bracing for the next big one for the last decade.
But if you look at the percentage of the state population with the most earthquake insurance, you might be surprised to find that the Sooner state, according to Oklahoma Insurance’s John Doak, has nearly 50 per cent more uptake on earthquake coverage than California residents who are straddling a geological time bomb.
Here in Canada, this raises concerns for insurers who may be on the hook for 'man-made' fracking north of the border, the liability exposures that come with it.
Oklahoma has suffered a huge uptick in quake activity in recent years, overtaking California to take the dubious crown for most quake-prone state in the country last year. And many are pointing the finger at fracking activity which, in many policies, is a man-made quake and excluded from coverage.
“This rise in seismic activity, especially in the central United States, is not the result of natural processes,” according to a statement released last month by federal scientists at USGS. “Deep injection of wastewater is the primary cause of the dramatic rise in detected earthquakes and the corresponding increase in seismic hazard in the central U.S.”
Here in Canada, a form of fracking has been used in the western provinces for years, utilizing horizontal drilling and steam technologies - but not the deep drilling technology that has created the problems now being encountered in the United States.
The federal Minister of Public Safety and Emergency Preparedness told
Insurance Bureau of Canada delegates at a recent earthquake symposium in Vancouver, B.C. that Ottawa is committed to partnering with stakeholders and the insurance industry on preparing for a major earthquake.
“Preparing for an earthquake means acting now,” said Minister Blaney. “We need to build resilient communities that can better withstand and recover from the impacts of natural disasters and other emergencies.”
Oklahoma’s Commissioner Doak, however appears to be expecting carriers to give policy holders the benefit of the doubt. (continued.)
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“At present, there is no agreement at a scientific or governmental level concerning any connection between injection wells or fracking and earthquakes,” Doak said in a bulletin this week. “In light of the unsettled science, I am concerned that insurers could be denying claims based on the unsupported belief that these earthquakes were the result of fracking or injection well activity. If that were the case, companies could expect the Department to take appropriate action to enforce the law.”
The Oklahoma Supreme Court is currently considering Sandra Ladra vs New Dominion LLC in which a Prague, Okla. resident is seeking compensation for injuries she received in the 2011 5.6 magnitude Prague earthquake. Carriers will be watching the case with interest. Last year Oklahoma recorded 567 earthquakes of 3.0 magnitude or greater – more than the previous 30 years combined.
Last year around 100 earthquake insurance claims were filed in Oklahoma but only eight were paid out.
