S.C. home insurance reform: Bill sets stage for efforts to reduce premiums
In the first serious shot at home insurance reform in six years, a Lowcountry legislator introduced a bill that would provide tax credits to coastal insurers and arm consumers with better information to shop.
Storm of Money
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Sponsored by state Sen. Tom Davis, R-Beaufort, the bill sets the stage for a debate over the hot-button issue of high property insurance rates. “It's the beginning of a conversation,” Davis said Monday.
He said the market for home insurance in South Carolina is broken but could be fixed if more companies enter the coastal market. “We can make purchasing insurance easier and more competitive.”
A Post and Courier investigation revealed that South Carolina has some of the highest home insurance rates in the nation. Because of recent rate hikes, many coastal homeowners now pay more for insurance than property taxes.
One of the bill's provisions would give tax credits to companies that insure large numbers of coastal properties. Doing this would cost the state about $3 million to $4 million in revenue, Davis said, adding that the loss would be worth it if it increases competition and lowers bills.
“Tom Davis is a breath of fresh air in seeing this out,” said Daryl Ferguson, a retired telecommunications executive from Beaufort who formed an insurance reform group. But Ferguson said he thinks the bill doesn't go far enough.
Legislators should consider repealing a state law that lets insurance companies easily raise rates as long as they don't ask for more than 7 percent a year, Ferguson said. “That's a red-flag, bull's-eye to insurance companies that South Carolina is a place to make easy money.”
Ray Farmer, the state's new director of insurance, called the bill a “great step in the right direction.” Farmer said the department already collects and publishes some information on rates, and he acknowledged that the agency has done a poor job organizing and distributing it, especially on its website. He hopes to revamp the site in the next few months.
Russ Dubisky of the S.C. Insurance News Service said in an email that some aspects of Davis' bill “will serve our state well — especially the efforts to create a more competitive insurance market and attract more homeowner insurance companies to South Carolina.”
But he defended the industry's pricing, saying that the state has among the lowest rates in the Southeast and Gulf coasts, and that consumers have plenty of insurance options.
Davis said he “has no pride in authorship” in what he's calling the “Competitive Insurance Act” and expects changes as it goes through the legislative mill. His main goals were to get the bill filed in time for a serious debate during this year's session. “I'm convinced we can make purchasing insurance easier and more competitive.”
Reach Tony Bartelme at 937-5554.