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Increased competition has helped to steady insurance prices, make more policies available

April 25, 2009

Island Packet - 05/26/09
By Josh McCann

In 2005 and 2006, finding insurance for homes in the Lowcountry was often a nightmare.

Thousands of consumers howled about the lack of available, affordable coverage at public meetings along the South Carolina coast, said Allison Dean Love, executive director of the South Carolina Insurance News Service.

Those complaints have diminished considerably since South Carolina lawmakers passed reforms in 2007, said Love, whose nonprofit organization is funded by the insurance companies that operate in the state.

Before the Omnibus Coastal Property Insurance Reform Act, some companies refused to write new policies or renew old ones for property in coastal areas, she said.

Since then, more than a dozen new companies have entered the state, helping to stabilize prices.

"We have as healthy a marketplace as I've seen in years," Love said. "It's such a relief."

The law has worked so well that other states have used it as a model, Love said.

Love said many consumers aren't taking full advantage of the law, however.

Among other provisions, the law does the following:

  • Requires companies to provide discounts for fortifying homes with, for example, hurricane shutters or a new roof.
  • Establishes tax credits for those improvements.
  • Allows homeowners to create catastrophe savings accounts to pay for deductibles and uninsured damage.
  • Establishes a grant program to encourage homeowners to weatherproof their homes. The program has been so popular, it has run out of money.

Love credited Scott Richardson, director of the Department of Insurance, with helping to create a regulatory environment that attracts new insurance companies by helping homeowners strengthen their houses and allowing insurers to focus on specific niches.

"We've got a very free-market attitude," said Richardson, a Hilton Head Island resident and former state lawmaker. "We're really rewarding mitigation and consumers making the right decisions, which the insurance companies like."

One of the most recent companies to write policies in the state, PURE Risk Management, arrived in May 2008 to specialize in large, well-built, high-priced homes.

President and CEO Ross Buchmueller said South Carolina has created one of the most attractive markets in the country and therefore has an abundance of well-funded insurers who should be ready in the event of a major storm.

There are more dollars available to pay claims in South Carolina than in Florida, he said, even though the Sunshine State has more people and more valuable properties.

"By and large, the market seems to be performing pretty well," he said.

While South Carolina has made progress, insurance agents and providers said, there's plenty of room for improvement.

Although the increased competition has helped to steady prices, people who move to the area from other states are surprised when they have to pay several times what they did for insurance farther inland, said Bill Thomas, vice president and agency manager of BB&T Carswell Insurance Services on Hilton Head Island.

"Pricing is still an issue," he said.

Over the long term, though, the state's consumers should be able to drive prices down by shopping around, Buchmueller said.

Until then, consumers can take solace in knowing the state's insurance landscape looks markedly different than it did in the recent past, Love said

"It's a completely different world," Love said. "We're really fortunate to live in South Carolina."

Increased competition has helped to steady insurance prices, make more policies available