COLUMBIA — A state Senate panel advanced Gov. Nikki Haley’s nominee to run the state’s insurance agency, with the nominee telling senators the department’s chief focus is on the issue of coastal insurance rates.
The nomination of Ray Farmer next heads to the full Senate, where he is expected to be confirmed.
Wednesday marked the third committee confirmation hearing for Farmer, a Georgia native who most recently worked as an insurance industry lobbyist for 33 years but before that served as a regulator and adjustor.
The extended committee confirmation process is a departure from the typically swift confirmation votes for S.C. gubernatorial nominees.
Farmer faced criticism and opposition from Lowcountry insurance activist Daryl Ferguson, and questioning from senators on the Banking and Insurance Committee concerned about home insurance rates.
But lawmakers decided Wednesday that Farmer deserves the chance to address the rate issues.
“The only way we can figure out if you can do the job or not is to give you a chance,” Sen. Ronnie Cromer, R-Prosperity, said to Farmer.
Sens. Luke Rankin, R-Conway, and Nikki Setzler, D-West Columbia, said the hearing process for Farmer that was heavy on fact-finding should represent the new standard for Senate confirmation hearings.
And Rankin said lawmakers should have done more to examine the insurance rate issues brought to the fore by Ferguson before the hearing. “It’s an indictment of ourselves that we as a legislative body haven’t done more to examine these issues,” he said.
Farmer has led the insurance agency since December in an interim role. He told lawmakers Wednesday that the department has made progress in his short time on the job. He disputed the use of statistics highlighted by Ferguson in previous hearings showing insurers in South Carolina have received a greater than 20 percent return on their investments in the state.
The statistics used by Ferguson are maintained by the National Association of Insurance Commissioners.
Farmer emphasized to senators that in 2011, South Carolina insurers received a negative 8 percent return on their investment, a result of various weather events. Factoring in 2011, the industry still made an average of 20 percent profit compared with their investment in South Carolina over the last decade. Farmer argued that a better examination insurance rates involves looking at the last 25 years, not just the last decade.
“We need to have our companies solvent,” he said. “We need them to be here for the long run to pay claims.”
But Farmer said tackling the issue of home insurance rates paid by coastal consumers is his top priority. An independent actuary study of the home insurance rates charged by the top seven providers will be completed within the next few weeks, he said.
A series in The Post and Courier last year featuring Ferguson revealed that South Carolina has some of the highest home insurance rates in the nation, and that state regulators have done little to examine the industry’s secret black box computer programs and other arcane rules that make rates so high.
Ferguson said after Wednesday’s hearing that he disagreed with senators’ decision to advance Farmer, but noted that the committee had no idea about the coastal insurance issue before the hearing.
“It provided an eye-opener to senators,” he said.
A Senate subcommittee has been appointed to further study home insurance rates in South Carolina.