Time to talk insurance reform
It isn’t easy for homeowners to discuss the complexities of property insurance — beyond saying that they pay way too much for it.
But in a series of articles called “Storm of Money,” The Post and Courier’s Tony Bartelme has given property owners enough information to explain to their representatives in Columbia why they are dissatisfied — often really, really dissatisfied — with what they are paying and how the industry works in this state.
And legislation submitted by Sen. Tom Davis, R-Beaufort, and gaining traction in Columbia, sets out to gather data, address concerns and ensure that consumers and legislators have the information they need to handle their business effectively.
Sen. Davis’ bill is a work in progress. But its four basic tenets make sense:
■ Homeowners must be empowered as informed consumers — able to shop for fair prices and make sound choices. The state’s insurance commissioner would be the facilitator.
■ More insurance providers must be willing to do business in South Carolina because they are confident it is a fair and profitable market. The more providers, the more competition and the better prices for consumers.
■ Consumers should be encouraged to lower their premiums by making improvements to their property. Sen. Davis’ bill would increase funding that allows those upgrades to win homeowners tax credits, and would make people aware of other incentives related to property insurance.
■ The Legislature and the public need to receive regular, accurate and understandable data about the industry in South Carolina and elsewhere. What are the premiums? What are the profits?
Wisely, the senator’s approach is not for the state to interfere in the insurance business overmuch, but instead to foster a market-oriented environment.
At this stage, a special subcommittee of the Senate Banking and Insurance Committee is holding meetings to hear from different stakeholders. The plan is to meet around the state so that more people can attend.
“It won’t happen quickly,” Sen. Davis tells us. “It is complex and needs careful consideration. I expect the subcommittee will continue work on this throughout the summer and fall and bring a revised bill forward early in 2014.”
The chairman of the subcommittee, Sen. Luke Rankin, R-Myrtle Beach, has committed to keeping this bill moving forward. And Raymond Farmer, the new S.C. insurance commissioner, has pledged his support and cooperation. Initially, the former lobbyist for the insurance industry declared that premiums in South Carolina are reasonable. But to his credit, he agreed to re-examine the facts and now concedes that some premiums are not commensurate with the risk assumed by providers.
That confusion is likely an omen of what is to come.
For example, Mr. Bartelme, after consulting with numerous experts, found that South Carolinians pay some of the highest insurance premiums in the country.
But in a letter to the editor, Russ Dubisky, executive director of the South Carolina Insurance News Service, said only 12 states have lower insurance rates than South Carolina.
Those whose insurance rates have skyrocketed — statewide, rates have increased 71 percent in the past 10 years — would have no trouble deciding whose figures are correct. But the disparity is a clear indication that Sen. Davis is correct in asserting the need for accurate, consistent data.
Such dissonance is also a reason for the Legislative Audit Council to investigate the homeowners insurance industry in South Carolina. Its clear, unbiased judgment would provide a solid foundation for the Legislature as it proceeds with reforms. In 1997, the LAC provided an automobile-insurance assessment that the Legislature used as a basis for comprehensive reform.
Homeowners insurance has a profound effect on consumers, business, and the real estate market. The subcommittee considering Sen. Davis’ bill intends to hear from all sides.
If the final product is property insurance reform that gives consumers — and insurers — a fair, honest and competitive market, it will be well worth the wait.