The PCI is urging South Carolina not to allow its "market of last resort" to undercut rates offered in the private market
The Property Casualty Insurers Association of America (PCI) is recommending that South Carolina governor Sanford and the legislature advance a positive agenda of reform that it says will in the long run strengthen the state’s coastal insurance market.
The new legislation would include a limited expansion of the South Carolina Wind and Hail Underwriting Association as well as a requirement that it be the “market of last resort” and not offer rates competitive with the private market.
If accepted, this would be in marked contrast to new legislation passed in Florida earlier this year. The new laws, passed by Florida governor Charlie Crist, allowed the state’s insurer-of-last-resort, Citizens, to undercut homeowners’ premiums offered by private insurers.
This South Carolina legislation ratifies an order of the Department of Insurance that expanded for two years the territories available for coverage through the windpool. The bill also contains several proposals that would effectively address catastrophic risks, benefit consumers and help stabilise the insurance marketplace.
The bill would create a special catastrophe savings account for purposes of allowing homeowners to build up tax-free funds for payment of a windstorm deductible. There are also provisions that grant special tax credits for qualifying expenditures by homeowners to retrofit their homes to better protect against disasters. The bill also prohibits an insurer from non-renewing a policy during hurricane season without 90 days notice and allows a consumer 30 days to appeal a non-renewal.
“South Carolina is considering a number of promising steps in this legislation that if passed, could provide stability to the state’s insurance market,” said Robert Herlong, vice president and regional manager for PCI. “This positive approach to insurance reform is welcomed and we believe that this effort is the type of innovative thinking that is needed to attract capital to the state. South Carolina appears to be on track with a well-reasoned approach, rather than a quick-fix solution that could ultimately be counterproductive.”