Sifting through the opposing rulings on the legality of the subsidies on the federal health insurance exchange.
Feb. 23--Beaufort County activists are cautiously optimistic that state wind-insurance premiums -- which they argue are too high and damaging to the area's economy -- might soon be trimmed.
It's been nearly a year since Daryl Ferguson and a group of other Lowcountry business people began gathering evidence that the area's home-insurance rates are disproportionately high. They also sought to figure out why, and what the state could do to lower rates.
Their work is finally getting some attention -- and legislative traction.
Ray Farmer, the state's newly confirmed insurance commissioner, is in talks with state Sen. Tom Davis, R-Beaufort, and other area residents to identify ways to lure more insurance companies to the state to compete, thereby lowering rates. They're also looking for new ways to let homeowners comparison-shop for the best deals on wind insurance.
Davis hopes to introduce a bill soon.
A Senate subcommittee, of which Davis is a member, also hopes to recommend what else can be done at the state level to lower rates.
In Beaufort County, the average premium for a home insured for $150,000 is about $1,840 a year, according to a study by The (Charleston) Post & Courier.
Statewide, premiums have risen 71 percent during the last decade and are nearly three times higher than in 1996.
In fact, Ferguson says even though the state's coast, particularly in Beaufort County, is seldom hit by hurricanes, insurance companies are charging homeowners here more than those who live in areas hard hit by recent hurricanes, including Gulfport, Miss.
"It's a serious, serious problem. It's a crisis," said Ferguson, a retired Beaufort resident who formerly led a public utility company.
AND A DRAG ON SALES
Inflated rates damage Lowcountry home sales and the area's economy in general, according to Andy Twisdale, a Hilton Head Island real estate agent and a member of Ferguson's group.
"This perceived threat of hurricanes affects tourism and home buyers because people are afraid there is more hurricane risk than there actually is," he said, offering examples of clients who have hesitated to move to the area and retirees who have settled elsewhere because of high premiums.
Attempts Thursday and Friday to reach Farmer for comment were unsuccessful. However, his spokeswoman, Ann Roberson, said the new commissioner considers reduction of these rates a top priority.
"Director Farmer and the department are not only concerned about reducing the cost of coastal property insurance, but are also concerned about the availability of coastal property insurance," she said.
Farmer told senators during his confirmation hearing that premiums matched the risks being assumed by insurance companies. Later, however, he said he would make rate reduction a priority.
A spokesman for Gov. Nikki Haley, who appointed Farmer, also said Friday she favors efforts to decrease premiums.
STATE'S STOP-GAP MEASURE
South Carolina has grappled with home-insurance rates before. Lawmakers thought they had discovered a solution in 2007.
In the aftermath of Hurricane Katrina, many insurance companies either substantially increased premiums for wind-damage coverage or stopped writing such policies altogether in states considered to be prone to hurricanes.
To help residents find coverage, South Carolina increased the area covered by the state's wind pool -- a state-chartered insurer of last resort for homeowners and business owners who can't get coverage in the private insurance market. State legislation also created new tax credits to help people purchase windstorm insurance policies in the private market if they weatherized their homes, and tax subsidies to encourage private companies to write full-coverage wind insurance.
"That worked for a while," said Davis, who at the time was chief of staff for Gov. Mark Sanford. "But about a year ago, we saw premiums start rising again."
WHY RATES ARE ON THE RISE
The reasons for the premium increases, which are increasing for residents across the state, are complicated and multifold.
Twisdale points, in part, to a state law allowing insurance companies to raise rates up to 7 percent annually. Some point to hurricanes in other coastal states that have caused immense damage.
And others attribute the rise to the complicated nature of setting premiums, said Russ Dubisky, director of the S.C. Insurance News Service, which represents insurance companies that write policies in the state.
"We're selling a product that we don't know its cost until the future. It's a complicated product," said Dubisky, adding that current rates are not based on what homeowners have previously paid but the future risks the insurance company believes it is assuming. To calculate that, insurance companies are taking into account the rising costs of repairing and rebuilding homes.
The average claim paid out by insurance companies in South Carolina has risen by 155 percent in the past 15 years, Dubisky said.
And although hurricanes infrequently hit South Carolina when compared to some other states, "when they do hit, they have the ability to level entire towns. It can wipe out an insurance company's premiums for years -- not their profits, but premiums," he said. "Luckily, hurricanes in South Carolina are infrequent, but we're on the hook for whenever they do hit."
The level of building along the state's coast also means higher premiums for everyone across the state, he added.
About 28 percent of the state's total insured value is along the coast; in North Carolina, the figure is 9 percent, and in Georgia, it is 5 percent.
"So we have more that could be in harm's way than other states," he said.
Premium increases are not out of line, according to Mark Brannon, an independent actuary with Merlinos and Associates, who recently reviewed rate filings submitted to the S.C. Department of Insurance from the top seven insurance companies.
"In many cases, insurers are moving rates in coastal areas in annual steps, taking two or more years to get to adequate rates that cover the costs of providing insurance," he said.
Ferguson puts some of the blame on the state for failing to regulate insurance companies in recent years.
And he has doubts it will improve under Gov. Nikki Haley's appointment of Farmer, who spent 33 years as a lobbyist for the insurance industry. Before that, Ferguson worked as a regulator and adjuster in Georgia.
"You have to have a commissioner who looks after the industry and also the people," he said. "And you don't get that with a lobbyist. It's letting the fox guard the hen house."
Friday, Haley's office defended its pick of Farmer.
"Ray Farmer has a depth and breadth of experience in the insurance field that makes him uniquely qualified to take on the challenges facing the Department of Insurance," said Rob Godfrey, Haley's spokesman. "The governor refused to settle for just anyone but the very best to serve as insurance director, and that's what South Carolina found in Ray Farmer."
THE NEW APPROACH
Davis said he and others are considering a new, twofold approach:
* Cutting red tape and providing incentives to entice insurance companies to do business in South Carolina. Davis said he and Farmer might suggest new tax credits and updates to the state's hurricane damage mitigation program -- the S.C. Safe Home Grant Program -- which offers grants to residents whose home improvements help protect against hurricane winds. "I'm asking questions like, 'What are the things that insurance companies look at to determine where they want to do business?' " Davis said.
* Giving S.C. homeowners and business owners easily accessible information so they can shop around for affordable coverage.
"Shopping for insurance is a daunting thing," Davis said. "You've got pages and pages of exceptions and fine print. But we've got the technology to allow consumers to access a lot of data that is non-threatening and empowers them. And that's a role the insurance commissioner can plan, to take a complicated subject and boil it down and make it easy to compare."
Follow reporter Gina Smith at twitter.com/GinaNSmith.
, The (Charleston) Post and Courier, Jan, 24, 2013
Initiative to lower insurance premiums gaining traction, leaders say, Aug. 20, 2012
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