From Reuters

OKLAHOMA CITY (Reuters) - As the number of earthquakes in Oklahoma exploded into the hundreds in the last few years, nearly a dozen insurance companies moved to limit their exposure, often at the expense of homeowners, a Reuters examination has found.

Nearly 3,000 pages of documents from the Oklahoma Insurance Commission reviewed by Reuters show that insurers and the reinsurers who cover them grew increasingly concerned about exposure to earthquake risks because of heightened frequency of seismic activity, which scientists link to disposal of saltwater that is a byproduct of oil and gas production.

Even as they insured more and more properties against earthquakes in the past two years, six insurers hiked premiums by as much as 260 percent and three increased deductibles. Three companies stopped writing new earthquake insurance altogether, state regulatory filings obtained by Reuters show. Several insurers took more than one of those steps.

In addition, the insurers would consider suing oil and gas companies for reimbursement in instances where they would have to pay damages to homeowners, according to several sources, including two insurance company officials.

So far Oklahoma's biggest earthquake was a 5.6 magnitude temblor in Prague in 2011 that buckled road pavement and damaged dozens of homes.

However, the push to limit earthquake exposure reflects insurers' fear that the surge in small quakes is a portent of a 'big one' in coming years, given the relationship between the magnitude and a total number of earthquakes in a certain area.

The filings show many insurers explicitly stated they were concerned about exposure to earthquake risk. In late March, the U.S. Geological Survey (USGS) warned that 7 million Americans were at risk of so-called induced seismicity.

The warning further heightened insurers' and reinsurers' concerns, Oklahoma Insurance Commissioner John Doak said.

Because earthquakes were rare in Oklahoma before shale oil and gas production soared in the past decade, very few residents carried earthquake insurance back then.

OIL, WATER AND QUAKES

That has changed as the number of quakes of magnitude 3.0 and higher recorded in the state soared from a handful in 2008 to 103 in 2013 and 890 last year, according to USGS. The value of coverage, usually offered as an add-on to standard homeowners' policy, also spiked to $19 million in 2015 from less than $5 million in 2009, according to the Insurance Information Institute, a trade group.

Scientists link the quakes to the injection of wastewater generated from the oil and gas production process deep underground. Volumes of so-called "produced water" have ballooned as horizontal drilling and hydraulic fracturing, or fracking, boosted output in Oklahoma.

Monthly injection volumes in Oklahoma doubled between 1997 and 2013, according to a 2015 Stanford University study.

The Oklahoma Oil & Gas Association has said state regulators' efforts to work with producers to limit the amount of wastewater injected would reduce seismicity.

So far, relatively few homeowners have filed claims, in part because the damages were not big enough to exceed the deductibles. Some who did say they had trouble getting compensation.

Julie Allison said the cumulative effects of the 39 earthquakes of magnitude 3.0 and above that had struck within two miles of her home in Edmond, Oklahoma, had caused $70,000-80,000 in damages, but Farmers Insurance denied her claim in April.

"They did not deny that we had damage," Allison said. The insurance company, however, blamed it on ground erosion and settlement, she said.

Farmers said it relied on outside engineering experts for the assessment and that the Allisons have accepted the company's offer to pay for a second opinion by an expert of their choice.