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Property Insurance
WIND POOL EFFECTS ON YOUR INSURANCE
Following are explanations and suggestions attendees at a public meeting with the SC Insurance Commissioner heard:
The Wind Pool is a high-risk, catastrophic exposure, coastal area where rates are highest and availability from individual carriers is lowest. (high-risk/non-competitive market)
The original Wind Pool was a very narrow coastal band.
Insurance Companies threatened to cancel ~ 33,000 wind/hail/flood policies along coastal SC.
Insurance Commission & Legislators took emergency action and increased the Wind Pool area. By giving the Insurance Companies a larger area for higher rates, most cancellations were prevented.
The Wind Pool is comprised of 2 zones.
Zone 1 = 3/4% higher rate allowance over non-Wind Pool area
Zone 2 = 1/2% higher rate allowance over non-Wind Pool area (Little River is in Zone 2)
By law, the Wind Pool cannot be extended beyond reasonable risk areas. Therefore, further extension west to spread the risk (and rates) is not a viable option.
Enlarging the Wind Pool created a more favorable market for Insurance Companies, allowing the coastal market to become more competetive - a necessary ingredient for rate decreases.
Prior to enlarging the Wind Pool, only a handful of carriers would write in coastal SC. Now more and more are coming in ... the Commissioner estimates that rate reduction is dependent upon about 25 - 30 more companies writing in this area. An ideal goal would be for no carrier to write more than 10% of all policies.
Wind Pool Insurance is an association of SC carriers and is offered as a last resort.
Wind Pool Insurance is not cheap.
Wind Pool requires up-front full payment. The Commission is working on creating a payment plan but is not likely to offer one in the near future.
It is estimated that the process to stabilize insurance will take about 3 years, which we are about 9 months into.
The decline in condo market values of 40 - 60% should effect insurance premium reductions.
The current Wind Pool lines expire by March, 2009 but may be ratified into permanency.
The Wind Pool map, as well as other valuable information, can be seen at SC Department of Insurance and SC Wind and Hail Underwriting Association.
What can you do?
1. Shop around! As the Commissioner said "Rates are all over the place!" Because of the Wind Pool increase, more and more carriers are being licensed in SC and they are competative. Rates vary drastically!
2. The portion of the premium that covers wind/hail/flood also varies drastically from company to company. If you must go to the Wind Pool for wind/hail/flood, shop for a carrier for your standard insurance that will give you the largest credit for wind/hail/flood.
3. Check out all options, such as higher deductibles and coverage limits.
4. Call the SC Insurance Office with questions or to request their advise at 800-768-3467 or go to their website at SC Department of Insurance
5. Contact your State & Federal legislators with your problems/suggestions.
6. Ask your legislators what they are considering for long-term solutions. Some ideas out there include: small load (as little as 2%) on all policies nationwide to cover all catastrophies nation-wide (fire, earthquake, tornado, flood, hurricane, etc.), and tax-deferred status on catastrophic business for insurance companies to be used to create a reserve. Let them know what actions you support.
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At a glance
From 1978 to Sept. 30, 2007, the National Flood Program has paid $26,473,932 in S.C. flood losses.
In high-risk areas, one in four homes will experience a flood over the course of a 30-year mortgage.
30 to 35 percent of flood losses occur outside of high risk areas.
Source: S.C. Wind and Hail Underwriting Association
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