State politicians address property insurance relief

Friday, 30 March 2007

Page 1 of 2 By Shelia Watson Several plans for insurance relief proposed recently by state politicians aim to alleviate the high cost of coastal property insurance and protect consumers against cancellation and non-renewal of policies. However, professionals in the insurance industry are both welcoming and criticizing the proposed legislation. In February, Sen. Glenn McConnell, R-Charleston, president pro tempore of the state Senate, introduced a bill to reduce excessive coastal insurance rates. The proposed South Carolina Insurance Accountability, Reorganization and Relief Act of 2007, bill S. 412, would convert the current Wind and Hail Association into the S.C. Hurricane Underwriting Association. The new entity, designed to be tax-exempt, would be a public body of the state and would have the ability to issue bonds for which it could seek tax-exempt status. The S.C. Hurricane Underwriting Association would expand the current territory of the wind pool, which is a strip of land and barrier islands to the east of U.S. Highway 17. The association would provide hurricane insurance coverage for the current area of the wind pool plus all areas within Beaufort, Berkeley, Charleston, Colleton, Dorchester, Georgetown, Horry and Jasper counties not presently included in the wind pool coverage. McConnell, chairman of the Judiciary Council, said in a statement that the association would be funded by premiums from the policyholders, and the premiums would be based on actual expected costs of providing hurricane coverage that are actuarially sound. “At first, this coverage may not be cheap, but it will reflect the actual risks faced in South Carolina,” he said. In addition, the bill would require that the director of the state Department of Insurance be elected instead of appointed and would establish the South Carolina Hurricane Damage Mitigation Program within the Department of Insurance to help insured people benefit from upgrading their property to withstand hurricanes. The bill also would provide that notice of a policy not being renewed be given at least 100 days prior to expiration of the policy, and, in the case of a non-renewal during hurricane season, which runs from June 1 to Nov. 30, notice must be written and given at least 100 days prior to expiration or by June 1, whichever is earlier. In March, McConnell proposed additional protections against arbitrary cancellation and non-renewal of insurance policies. “By combining the concepts for extended notice and for the South Carolina Catastrophe Modeling Act, which I previously introduced with (several) co-sponsors … in S. 412, with these new provisions restricting when policies are cancelled or non-renewed and when deductibles may be increased, I believe homeowners who are experiencing sudden cancellations after years of patronizing a particular insurance company will receive the protections they deserve,” he said. McConnell’s proposal is based on a Louisiana law that prevents insurance companies from canceling policies or raising the deductible if the policy has been in effect for at least three years. The proposed legislation would forbid canceling, failing to renew or raising a deductible on a policy in effect for three years except in certain cases such as non-payment of premium. A few weeks after McConnell’s proposals, Gov. Mark Sanford and Department of Insurance Director Scott Richardson announced legislation, also aimed at alleviating the high cost of coastal property insurance, which will be introduced in the House by Labor, Commerce and Industry Chairman Harry Cato, R-Greenville. “South Carolina, along with other states on the East Coast and Gulf Coast, continues to face the twin problems of escalating premiums and fewer insurers,” Sanford said during the announcement. “I think that, unlike other states like Florida that acted in a knee-jerk fashion to these problems, we have to be incredibly deliberate in what we do. These solutions are aimed at what I believe is ultimately the key to addressing this problem, and that is finding ways to encourage, rather than discourage, insurers to write policies along the coast.” The legislation would create a number of tax incentives aimed at directly impacting the cost to homeowners. << Start < Prev 1 2 Next > End >>