A potentially blustery hurricane season is on the horizon for the storm-prone South Carolina coast. But for now, at least, all is calm on the property-and-casualty insurance front.
Industry experts agreed that competition within the industry has increased, coverage is more widely available to consumers, and price increases have, for the most part, remained reasonable since spiking several years ago.
Also, the state has enough backup insurance, or reinsurance, to cover wind-damage claims from a 150-year storm, according to Scott Richardson, director of the state Insurance Department.
"You're always just one hurricane away from going to heck in a hand basket, but right now, it's so far, so good," he said.
That's somewhat reassuring as South Carolinians gear up for the dreaded start of hurricane season Tuesday. And it's expected to be an active six months based on the latest forecast.
On Thursday, The National Hurricane Center predicted that 23 named tropical storms will take aim at the Americas, including as many as 14 hurricanes, big and small.
Those numbers would have been even more menacing a few years ago, when the newly appointed Richardson faced standing-room-only crowds in Charleston and other cities. At the time, many coastal residents were concerned about finding coverage after some of the largest insurers dropped thousands of longtime customers. Premiums skyrocketed.
South Carolina has since made some key changes while sticking to its free-market-based approach, helping it attract about 15 new carriers.
"It's pretty competitive right now," Richardson said.
By all accounts, homeowners are far less anxious about coverage than in '07. Richardson noted that just four people showed up at a community insurance forum he led in Myrtle Beach this month, compared to hundreds three years ago.
"We took that to mean everything's fine or nobody cares," the former state lawmaker quipped. "It was rewarding."
The influx of insurers can be traced in large part to the 2006-07 expansion of the "wind pool" territory, which in the Charleston region is the ribbon of shoreline east of U.S. Highway 17.
For risk-conscious carriers, that represented a carrot because it enabled them to exclude costly wind- and hail-damage claims from homeowner policies they wrote near the ocean.
That liability shifted instead to a state-run cooperative called the S.C. Wind and Hail Underwriting Association.
Smitty Harrison, the association's executive director, said that wind pool policies accounted for total premiums of about $97 million last year, an increase of just $200,000 from 2008.
"We're seeing business move out of the wind pool and business move in, but the number of policies is relatively stable," Harrison said. "While certainly not perfect, it's vastly improved and getting better all the time."
Kathy McKay, chairman of the Independent Insurance Agents & Brokers of South Carolina, agreed that the property-and-casualty market in South Carolina is in much better shape than it was a few years ago.
"It's amazing the position South Carolina is in compared with all of the surrounding states and the Gulf states, said McKay, a principal at Mount Pleasant-based McKay Insurance Inc. and McKay Stelling and Associates.
The wild card, of course, is Mother Nature.
McKay noted that the insurance industry faced about $4 billion of exposure along the South Carolina coast when Hurricane Hugo came ashore near McClellanville in 1989. That figure now stands at a staggering $200 billion, raising some scary questions for homeowners.
"We just keep building on the coast, and ... a big fear is if Hugo were to happen again, what's going to happen afterward?" McKay asked. "How are carriers going to feel? And how are reinsurers going to feel? Are they going to be willing to do it again?"
Contact John McDermott at 937-5572 or email@example.com.