Insurance; requiring certain filings; establishing requirements to determine excessive profit; requiring return of certain amounts. Effective date.
SB 1438 would create a new section of Oklahoma insurance law aimed at monitoring and limiting excessive profits for certain private passenger automobile insurers. The bill applies to insurers writing family, standard, personal, or similar private auto policies, but excludes commercial auto insurance. It requires covered insurers to file annual consolidated data with the Insurance Commissioner by July 1, including earned premium, incurred losses and loss adjustment expenses, administrative and selling expenses, and policyholder dividends.
The bill establishes a formula for determining whether an insurer group has earned “excessive profit” over the three most recent calendar years. The Commissioner would compare the insurer’s three-year underwriting gain or loss against an anticipated underwriting profit benchmark, and if the gain exceeds that benchmark by more than 5% of earned premiums, the insurer could be ordered to return the excess. The bill also requires insurers to file loss and loss-adjustment experience for the prior three accident years and specifies how underwriting gain or loss is to be calculated and compared.
If an insurer is found to have excessive profit, the Commissioner must provide a hearing and then order a refund unless the insurer proves the refund would cause financial impairment or insolvency. Refunds must be distributed pro rata to policyholders of record as of December 31 of the final compilation year, either as cash or as a credit toward future premiums. Cash refunds must be paid within 60 days of the final order, and credit refunds must be applied to renewal notices issued more than 60 days after the order; if coverage ends before a credit is used, a cash refund is required. Any refund is treated as a policyholder dividend for reporting purposes.
The bill would give the Insurance Commissioner rulemaking authority to implement the new reporting and refund system and would take effect November 1, 2026. In practical terms, it would add a new regulatory framework for reviewing auto insurers’ profitability in Oklahoma and could require direct payments or premium credits back to policyholders when profits are deemed excessive.
The bill appears to have faced significant opposition in committee and did not advance. It failed in the Senate Business and Insurance Committee on a 2-7 vote, indicating limited support among committee members. The available record does not include transcript debate, but the structure of the bill suggests the likely policy tension was between consumer protection and rate oversight on one side, and insurer concerns about profitability, solvency, and regulatory burden on the other.
SB 1438 would add Section 1018 to Title 36 of the Oklahoma Statutes, creating a new reporting and profit-review regime for private passenger automobile insurers. It would require annual filings with the Insurance Commissioner, establish a statutory test for excessive underwriting profit, authorize mandatory refunds or premium credits to policyholders, and permit the Commissioner to adopt implementing rules. The bill would directly affect auto insurers writing personal lines in Oklahoma and their policyholders, while excluding commercial auto coverage.
The bill appears to have been viewed unfavorably in committee, as reflected by its failure on a 2-7 vote in the Senate Business and Insurance Committee. With no transcript available, the recorded vote is the clearest indicator of sentiment, and it suggests the proposal did not garner broad support among committee members. The bill’s consumer-refund approach likely appealed to those concerned about insurer over-earning, but the committee outcome indicates stronger resistance than support.
The main point of contention is the bill’s proposal to define and regulate “excessive profit” for auto insurers and require refunds to policyholders. Supporters would likely frame the measure as a consumer protection tool to ensure premiums are not producing outsized insurer gains, while opponents would likely argue that the formula is rigid, could interfere with actuarial pricing, and may create solvency or administrative concerns. The bill also places significant discretion in the Insurance Commissioner and requires detailed reporting, which may have raised concerns about regulatory complexity and compliance costs.