SB 726: Insurance Industry Bill in Oklahoma

In May 2025, something unusual happened on the Oklahoma House floor. As reported by Oklahoma Watch, Rep. Mark Tedford, R-Tulsa, was presenting Senate Bill 726 when a colleague asked a simple question: "May I ask who requested this?" Tedford's answer—"This is a State Farm request bill"—brought the legislative process into sharp focus. Oklahoma's largest homeowners insurance company was asking legislators to remove a key penalty that discourages bad faith claim denials. The bill failed decisively. But the episode illustrates a larger truth: insurance companies don't just fight individual claims—they fight to change the laws that protect policyholders in the first place.

What SB 726 Would Have Done

To understand what was at stake, you need to understand Oklahoma's bad faith framework.

When an insurance company acts in bad faith — unreasonably denying or delaying a legitimate claim — policyholders can sue. If they win, Oklahoma law under 36 O.S. § 3629 imposes a 15% annual interest penalty on the judgment, calculated from the date the loss was payable.

This penalty serves a critical purpose: it makes delay expensive. Without it, insurance companies could drag out litigation for years, holding onto money that rightfully belongs to policyholders, earning investment returns while claimants struggle. The 15% penalty ensures that delay has a cost.

SB 726 sought to exempt property insurance claims from this penalty.

In practical terms, that means homeowners filing bad faith claims after storm damage, fire, or other property losses would lose this protection. Insurance companies could fight these claims indefinitely with reduced financial consequences.

Why Property Claims?

Rep. Tedford argued that property insurance disputes were typically about settlement amounts, not outright refusals to pay. The implication: these cases don't need the same protections.

But this characterization obscures reality. Many homeowners face exactly the kind of delay and denial the penalty was designed to address. They submit legitimate claims after tornadoes, hailstorms, or fires. Their insurer lowballs the estimate, denies coverage based on dubious policy interpretations, or simply fails to respond within required timeframes.

Oklahoma Watch's reporting noted that a pending lawsuit against the Oklahoma Insurance Department alleges that State Farm "routinely ignores deadlines." If true, removing the penalty for doing so would reward—not discourage—the behavior.

The geographic implications were also troubling. As Rep. Emily Gise, R-Oklahoma City, pointed out during floor debate: "How does that help our constituents, especially mine in tornado alley or Speaker Hilbert's with the fire damage?" Oklahoma homeowners face some of the most severe weather in the country. Property insurance isn't a luxury; it's essential. And the mechanisms that ensure fair treatment matter enormously.

The Vote That Killed It

SB 726 passed the Oklahoma Senate 40-7. But the House saw through it.

The final vote was 72-18 against—a resounding rejection. Oklahoma Watch reported that several representatives initially voted yes but changed their votes in the final seconds when the outcome became clear. The disclosure that State Farm had requested the bill appears to have been decisive.

Rep. Jim Olsen, R-Roland, recalled thinking: "Why are we going to exempt them?" Rep. Daniel Pae, R-Lawton, said he "could not figure out what the answer was for this bill."

Rep. Michelle McCane, D-Tulsa, summarized the bipartisan skepticism: "I am always a little bit cautious when we are receiving bills from a business. I didn't see a need for it, and I didn't have any rationale to explain a yes vote."

The Florida Cautionary Tale

Supporters of SB 726 pointed to Florida, where Governor Ron DeSantis signed sweeping tort reform measures in 2022 and 2023. Some claimed Florida's premium drops proved tort reform works.

But the data tells a different story.

A report from Weiss Ratings—the nation's only independent rating agency covering insurance companies—found that after Florida's tort reforms:

• Total lawsuits increased 24%
• Complete claim denials rose 17%

Premiums fell, but so did successful claim recoveries. The reforms didn't reduce litigation; they made it harder for policyholders to win. Insurers became more aggressive in denying claims, knowing the legal landscape had shifted in their favor.

Weiss Ratings founder Martin Weiss didn't mince words: "Insurers abuse their own customers, blame their own customers, and then try to get legislatures to protect them from their own customers' ire."

The Florida experience suggests that tort reform marketed as "lowering premiums" often means "making it harder to hold insurers accountable." Oklahoma legislators, to their credit, weren't fooled.

What This Means for Your Claims

If you're an Oklahoma policyholder, the defeat of SB 726 is good news—but it's also a reminder of what you're up against.

Insurance companies don't just fight claims at the adjustment stage. They fight at the litigation stage. And they fight at the legislative stage, seeking to reshape the rules to their advantage.

The protections that exist in Oklahoma law—like the 15% interest penalty, the right to sue for bad faith, the requirement that insurers act in good faith—didn't appear by accident. They exist because legislators recognized that policyholders need leverage against companies with vastly more resources.

When you pay premiums for years and then face a claim denial, these protections matter. They're the reason insurance companies can't simply ignore deadlines, lowball indefinitely, or fight every claim to the bitter end without consequence.

The Ongoing Battle

SB 726 failed, but the fight isn't over. As Oklahoma Watch reported, a "slew of new insurance laws" have been proposed for the 2026 legislative session. While Rep. Tedford assured reporters that none of his current bills originated with State Farm, he acknowledged that some language might come from insurance industry groups like the National Association of Mutual Insurance Companies.

For policyholders, vigilance is required. The same interests that sought to eliminate the 15% penalty will continue seeking other ways to limit accountability.

Recent polling shows overwhelming Oklahoma support for the right to sue insurance companies. Legislators appear responsive to that sentiment—SB 726's crushing defeat demonstrates as much. But corporate influence is persistent, and the next erosion of policyholder rights may come packaged more carefully.

If You're Facing a Denied Claim

Understanding the legislative landscape helps you recognize what's at stake. But if you're currently fighting a denied or delayed insurance claim, here's what matters:

Know your rights. Oklahoma law requires insurers to act in good faith. If they're not—if they're delaying, denying without legitimate reason, or failing to properly investigate—you may have a bad faith claim.

Don't accept the first offer if it's inadequate. Lowball offers are a negotiating tactic. You're not required to accept them.

Document everything. Keep records of every communication, every deadline, every promise made and broken. This documentation becomes evidence if litigation is necessary.

Understand the stakes. If you sue and win a bad faith claim, that 15% interest penalty applies—thanks to legislators who rejected SB 726. The penalties that make delay expensive for insurers exist to protect you.

For a complete guide to Oklahoma's bad faith framework, see our article on insurance bad faith claims.

Frequently Asked Questions

What is the 15% interest penalty under 36 O.S. § 3629?

When a policyholder wins a bad faith lawsuit in Oklahoma, the court adds 15% annual interest to the judgment, calculated from when the loss was originally payable. This penalty discourages insurers from delaying legitimate claims to reduce their financial exposure.

Does this penalty apply to all insurance claims?

Currently, uninsured motorist claims are already exempt from the 15% penalty. SB 726 attempted to add property insurance to that exemption. The bill failed, so property claims retain this protection.

Why would insurers want to remove this penalty?

The penalty makes delay costly. Without it, insurers could fight claims for years without additional financial consequence—potentially outlasting policyholders who lack resources for prolonged litigation.

How common are bad faith insurance denials in Oklahoma?

More common than many realize. State Farm alone faces hundreds of pending bad faith lawsuits in Oklahoma. Attorney General Gentner Drummond has intervened in representative litigation addressing these practices. For more on how insurers systematically undervalue claims, see our guide on delay, deny, defend tactics.

What should I do if my claim is being delayed or denied?

Document all communications, meet all deadlines on your end, and consider consulting an attorney. Bad faith claims have specific legal requirements, and early guidance helps protect your rights.

Will there be more attempts to weaken policyholder protections?

Almost certainly. Insurance industry lobbying is persistent. Staying informed about legislative developments and supporting consumer-friendly legislators helps protect these rights for all Oklahomans.

---

The defeat of SB 726 shows that Oklahoma legislators—when aware of who's writing the laws—will stand with policyholders over corporate interests. But that awareness requires disclosure, scrutiny, and engaged citizens paying attention to what happens at the Capitol.

At Addison Law, we represent policyholders against insurance companies that deny, delay, and defend legitimate claims. We understand the tactics insurers use—at the claims stage, in litigation, and in the legislature. If you're facing a denied or delayed claim, contact us for a free consultation.

---

This article is for general information only and is not legal advice.