An open letter to Gov. Nikki Haley:
The Sun News reported Jan. 21 that you chose David Black to run the Department of Insurance because of "his customer-friendly attitude." The reported quote by you shows that by "customer-friendly," you mean friendly to insurance companies. It is time that you, Black and the legislature also adopt a more friendly attitude toward South Carolinians by taking action to protect residents and homeowners' associations from the practices of property casualty insurance companies.
As a result of Hurricane Katrina, which had no physical effect on South Carolina, insurers in 2006 drastically raised their insurance rates in South Carolina, particularly along the coast, and began to engage in other practices to the detriment of residents and HOAs:
Insurers dropped wind coverage from their policies, which forced the state to expand the wind pool area, which resulted in higher premiums to residents and HOAs and increased the state's exposure in the event the wind pool had to cover wind damage.
Some insurers stopped writing property casualty insurance policies along the S.C. coast.
When the policies for some residents were canceled, the resident was told if an automobile policy was obtained from the insurer, the insurer would reinstate the property casualty policy; the resident then paid more for both policies.
In the last five years, insurers have been paid billions in premiums, but they have not paid out significant amounts of money for claims related to hurricanes.
HOAs, which, by law, must carry insurance, have been especially hard hit by insurers' practices. Since Katrina, HOAs have been forced to obtain their required insurance coverage from surplus carriers, whose rates are not regulated by the DOI. In addition, condominium buildings are categorized as "commercial" even though the building can only be used for residential purposes. Buildings that are rated commercial are charged higher premiums than buildings that are rated residential.
With your support, the legislature should:
1. Force regulated insurers who want to continue to write insurance in South Carolina to offer property casualty insurance, including wind coverage. Such legislative action would allow HOAs and residents to obtain property casualty insurance from regulated insurers so that, (i) presumably, they would be charged fair insurance premiums, and (ii) HOAs and individual homeowners would have recourse to address complaints about insurers to the DOI.
2. Not allow insurers to cancel policies, unless there is a valid reason for such cancellation.
3. Require all residential-only condominium buildings to be categorized or rated as "residential," not as "commercial," irrespective of the number of units in the condominium building.
4. Not allow insurers to use hurricanes that don't affect this state to set premiums for this state.
5. Not allow insurers to cherry pick where and to whom they will provide coverage, unless there is a good reason to deny coverage.
6. Prevent insurers from putting pressure on residents, whose property casualty insurance has been canceled, to purchase another type of insurance, e.g., automobile insurance, to get reinstatement of their property casualty insurance.
The writer lives in Murrells Inlet.