Thousands of coastal property insurance policies that would have been canceled will not be dropped now that the wind pool territory has been expanded, S.C. Director of Insurance Scott Richardson told about 200 Grand Strand homeowners Thursday.
Richardson said he asked insurance companies if he expanded the wind pool, would they consider not canceling policies they had planned to cancel and would they come in and write new policies.
"If I didn't get a yes to both of those questions, then we wouldn't have moved it," he said, adding that he got a commitment from the state's largest homeowners carrier that they would not drop wind coverage from their policies.
The S.C. Insurance News Service lists State Farm as the largest insurer of homes in South Carolina, with 27 percent of the policies.
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Richardson signed an order Wednesday to expand the wind pool - the state's last resort insurance market - to include property east of U.S. 17 Bypass. The previous line had been to U.S. 17 Business.
While many homeowners within the new expansion are thrilled with the move, there are many - especially in North Myrtle Beach where no change occurred - who are not happy.
"We don't have U.S. 17 Bypass in North Myrtle Beach," said condominium owner Theresa O'Briant Stewart, whose premiums went up 300 percent a few months ago.
Glen and Virginia Talley are paying $9,000 for condo association insurance at Edgewater in Barefoot Resort. Rep. Tracy Edge, R-North Myrtle Beach, asked the director to re-evaluate the line in North Myrtle Beach.
Richardson said his staff will look at making adjustments after it sees the new rates, and they would check into that area.
"Did we fix it 100 percent? Absolutely not. We are going to relook at the lines. We've been careful not to overburden the system," he said.
Reaction to the director's talk was mixed. Many residents felt more needs to be done to lower rates, but said they trusted Richardson for being willing to take action.
Richardson told them he was looking at making a special exception for specific condo complexes whose owners can't find insurance to come into the wind pool. The director said the expansion would attract more carriers, which would help lower insurance costs for those outside of the wind pool as well.
The expansion takes effect March 30 at the current wind pool rate. But the director has asked that the wind pool file for a new three-tiered rate, making insurance cheaper farther from the beach. It will be three or four months before there is a new rate, he said.
Richardson said some insurance companies will drop the wind coverage from current policies and keep the rest of the policy, but that is better than them dropping the policy completely as they had planned.
State Farm spokesman Bruce White said the company has no plans to drop wind coverage for its current customers, but may consider it for new customers.
Allstate spokeswoman Renita Ward said the company is reviewing the new boundary and determining how that affects current customers.
Richardson told condo owners that reinsurance costs are coming down, and they should start seeing relief in April 1 renewals.
And when one resident asked how the department can limit "cherry picking" by insurance companies, Richardson said he is looking at moving insurance companies that don't write along the coast out of the "preferred class" to where they will have more regulation.
He emphasized to residents that the insurance department exists to help them and is working for consumers, not insurance companies.
Gov. Mark Sanford said at a Thursday morning news conference in the Capitol that wind pool expansion is justified by the difficulty people are having getting coverage.
"This is a real crisis," but South Carolina needs to take the right approach to it and not do what Florida did, the governor said.
He said Florida reacted rashly to its insurance crisis and that companies are now fleeing the state.
He said he stands by his decision not to approve moving the wind pool line when former Insurance Director Eleanor Kitzman proposed doing so in August.
"That was very much a political environment prior to the election," Sanford said, adding that he did not want to take such an action in a politically charged environment.
Sanford was running for re-election, and his opponent, Democrat Tommy Moore, made the coastal insurance price increase an issue in the race.
At the Myrtle Beach meeting, condo owner Stewart told Richardson that Sanford should have moved the line a long time ago.
The solution is not just moving the wind pool, Sanford and Richardson said. Legislation will address other issues that contribute to the price increases.
The legislation includes a catastrophe savings account for people who may have enough money to try to cover themselves. For those with low incomes, there will be assistance to upgrade homes to make them more storm-resistant. Lower-income people could also get a tax credit if they must pay more than 5 percent of their income for insurance.
Tax credits would be allowed for materials to make homes more storm-resistant, and for insurance companies that write full coverage on the coast.
Richardson said waving a 2 percent tax to insurance companies for writing insurance within the wind pool zone and not excluding the wind coverage will attract them in.
"That will mean something to them. You win in that scenario," he told Strand residents.
Rep. Harry Cato, R-Travelers Rest, will lead the legislation in the House. He is chairman of the Labor, Commerce and Industry Committee.
Richardson said people should begin seeing relief by June 1. He said he has already heard from new companies that want to come to the state because of the changes.
"The reaction to what we've talked about has been so huge and so fast I'm almost stunned," he said.
Changes in federal tax law, however, exempting insurance company disaster reserves from income taxes, will have the most effect, Richardson said. He told Strand residents that he understands how they feel because he just found out his insurance got canceled too.
And he told them to fight back when inland residents say they don't want to subsidize the coast's insurance spikes.
"The coast is driving the train. Tourism and retirement generate more dollars than any other business combined," he said.