Affordable quake insurance rates remain elusive

By Daniel Enyart

The lack of affordable earthquake insurance has long been an issue in Washington. For example, after having collected over $350 million in revenues within the state over the past decade, the insurance giant State Farm filed for a quake insurance rate increase back in 2014, which was eventually granted. This increase included a 39 percent leap in commercial property rates in King County and a massive 117 percent spike here in Pacific and Grays Harbor counties.
Upon being contacted, a representative of the Washington State Office of the Insurance Commissioner declined to comment and instead directed the Herald to their public records search form.

However, in a Dec.15, 2016, article by The Seattle Times, current Washington State Insurance Commissioner Mike Kreidler acknowledged that his office has no way to definitively establish whether or not an earthquake insurance rate is excessive.

In the same piece by The Seattle Times he was also quoted as saying, "We didn't have anything we could really hang our hat on as to why we were uncomfortable [with the proposed increase]. I can't go to court with that kind of an argument."

Kreidler defended his office's handling of the State Farm case, however, being further quoted by The Times as saying his "office doesn't make inappropriate rate concessions."

The Herald spoke with Northwest Insurance Council President Kenton Brine. NWIC is a non-profit funded by member insurance companies in Washington, Oregon, and Idaho.

Brine confirmed that their organization does not have numbers regarding the percentage of property owners in the state who have quake insurance. But Brine did say that NWIC is going through the painstaking task of collecting that data. Ultimately though, the collection of that data requires insurance companies to voluntarily respond to a survey put out by NWIC, he indicated.

"It's our hope that sometime in the next few months we will have a more accurate picture of what the market looks like," Brine stated.

Brine did point out that there are indeed driving factors for the increases, such as the rise in the cost of construction and the fact that many structures in the Pacific Northwest are older and haven't been retrofitted with updated earthquake protection measures. Therefore, those companies that do offer quake insurance are in fact taking a risk in doing so. Simply put, those companies offering quake insurance have to protect themselves in case a "mega quake" hits the area, as has been predicted. Brine also pointed out that State Farm is not one of NWIC's member companies.

What the matter boils down to is that insurance companies in Washington don't have to offer earthquake insurance, residential or commercial, if they don't like the terms set forth by the Office of the Insurance Commissioner. This was made evident nearly a decade ago when Allstate simply stopped offering earthquake insurance within the state.

State Farm now seems to be taking advantage of the fact that state lawmakers haven't addressed earthquake insurance since 1999, when it was proposed that the Office of the Insurance Commissioner publish information online regarding coverage options. That bill, however, was never formally voted on by the Legislature, having died in committee.