Last month, Daryl Ferguson dropped by the Beaufort Regional Chamber of Commerce to brainstorm with several insurance agents about reducing the coast’s high insurance rates.
Matter of billions
Premiums South Carolina consumers paid for property and casualty insurance and losses/claims insurers paid.2007 $6.8 billion $3.3 billion2008 $6.7 billion $3.5 billion2009 $6.5 billion $3.5 billion2010 $6.5 billion $3.7 billion2011 $6.7 billion $4.4 billion Losses do not include individual carriers’ expenses for operations, salaries and other costs of doing business. Source: SC Insurance News Service
“In Beaufort, when you have a meeting like this, the best people dress is business casual,” said Ferguson, a retired chief executive officer of a large utility company.
So he was a little surprised when four men walked in wearing dark suits and patent leather shoes.
“They introduced themselves as lobbyists,” Ferguson said. One was a high-level official from a trade group in Boston; another handled nationwide lobbying strategies for the American re-insurance industry; and the remaining two were from Columbia.
“I thought, ‘Wow, think of the cost of sending all those people down to Beaufort.’”
Ferguson’s meeting was just a small example of the insurance industry’s political and economic muscle.
Nationally, the insurance industry spent $113 million on lobbying this year, and pumped another $50.6 million into federal campaigns, according to the Center for Responsive Politics, a non-partisan, nonprofit research group.
During the past three years, the insurance industry was the second biggest contributor to Tim Scott, the former Lowcountry congressman Gov. Nikki Haley has appointed as U.S. senator. An insurance agent and real estate investor, Scott received $193,625 from the insurance field since 2010, second only to contributions he received from real estate interests ($215,225).
In South Carolina, insurance-related industries dropped $428,013 into state campaigns this year, according to records compiled by the National Institute on Money in State Politics. Only political parties, lawyers, the candidates themselves and health professionals gave more.
Blue Cross/Blue Shield gave the most — $166,575. About 80 percent of the money went to Republican candidates.
Insurance-related companies also were generous donors to Haley this year, stocking her campaign account with $54,428. They gave more in 2010, when she ran for governor, $182,138, double what insurance interests gave her nearest Republican rival and three times what they donated to Democratic nominee Vincent Sheheen.
Consumers are politically outgunned by the well-funded insurance companies, which have raised rates almost at will in South Carolina, according to Ferguson and a team of other Lowcountry business leaders.
Ferguson said he was particularly concerned when Haley selected Ray Farmer, a lobbyist with the American Insurance Association, to be the state insurance department’s director.
“His past action, friendships, and maybe even his loyalties, are with the insurance industry at a time when our homeowner insurance is among the highest in the nation,” Ferguson said. The department “needs some fresh thinkers, someone who can go face-to-face with insurance industry executives.” Lobbyists, in general, he said, “are there to block things and protect the industry.”
Altogether, about 320 lobbyists were paid this year in South Carolina, and of those, 25 represent the insurance industry, including two former South Carolina insurance directors, according the South Carolina Ethics Commission.
“The insurance lobby is very powerful in South Carolina,” said John Crangle, executive director of Common Cause and a lobbyist himself. Watching “lobbyists at work is like midnight submarine races. You can’t see what they’re doing because they’re involved in one-on-one situations with legislators.”
Overall, he said, “They pretty much get what they want with the Legislature.”
Richard F. Davis of Capitol Consultants, who has been called the state’s top lobbyist, said “the insurance lobby is very, very active,” in South Carolina, “but it’s as much about disseminating statistics as anything.” This shouldn’t be surprising, he said.
“Insurance touches almost every business, whether it’s worker’s comp or health insurance or auto insurance.” And because of the insurance industry’s diversity, its lobbyists are a “talented group of government affairs people. They have to be, because insurance laws are so complex.”
Because of its importance to people and communities, insurance is among the most heavily regulated industries. States do much of the policy-making, which requires balancing interests of consumers with the needs of insurance companies to stay financially healthy so they can serve existing and future customers.
But as home insurance rates have grown on the coast, so have claims that state regulators failed to maintain a proper balance.
South Carolina has among the highest home insurance rates in the nation, a Post and Courier analysis found earlier this year. Many coastal homeowners now pay more in insurance than property taxes.
Insurance industry officials say high premiums on the coast reflect the region’s property values and construction costs, along with the inherent risks of living near the water’s edge.
In 2011, when 15 tornadoes touched down in South Carolina and wildfires burned 16,141 acres, property and casualty insurance companies paid almost $4.4 billion in claims to help individuals and businesses recover from losses, said Russ Dubisky, executive director of the SC Insurance News Service.
That year, South Carolinians paid $6.7 billion in premiums to insurance companies for coverage.
Reach Tony Bartelme at 937-5554.
Tony Bartelme/Staff Raymond Farmer, the new director of the South Carolina Department of Insurance, talks about his challenges and goals from his office overlooking the Statehouse.×
Raymond Farmer is a former lobbyist with the American Insurance Association. Photo by Tony Bartelme×
Daryl Ferguson -- insurance risk and rates -- in Beaufort on Friday May 25, 2012. (Wade Spees/postandcourier.com)×
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