~~~~~~~~~~~~~~~~
Property Insurance
WIND POOL EFFECTS ON YOUR INSURANCE
Following are explanations and suggestions attendees at a recent 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.
Recently licensed carriers include:
Ironshore Insurance, Ltd., licensed 5/14/07
Lancashire Ins. Co. Ltd., licensed 6/7/07
Homewise Preferred Ins. Co., licensed 11/3/07
Southern Fidelity Ins. Co., licensed 11/29/07
Privilege Underwriters Reciprocal Exchange (PURE), licensed 3/4/08
Fidelity Fire and Casualty Ins. Co., licensed 4/7/08
Florida Peninsula Ins. Co., license pending
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 competetive. 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 deuctibles 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.
~~~~~~~~~
Sun News article
Posted on Wed, Apr. 23, 2008
Wind pool residents balk at flood insurance rule
Insurance rates soaring
By Jessica Foster
jfoster@thesunnews.com
"Thomas Hanlon is not in a flood zone, but this year he had to pay almost $350 for flood insurance. It's the icing on the cake, he said, after seeing his wind and hail insurance soar from $1,100 to $3,400 since he moved to his home in Prestwick in 2004.
Like Hanlon, many Grand Strand residents in the wind pool are irked that a new state rule has them shelling out money for flood insurance on top of rising costs for wind and hail insurance.
The state this year started requiring residents in the wind pool - the coastal insurance market of last resort - to get flood insurance if they want to be reimbursed the full replacement cost for repairing storm damage.
Homeowners are being notified as their policies come up for renewal.
"It's a rip-off," Hanlon said. "If somebody can give me the relevance of flood to wind, maybe I could understand, but I don't think a flood is going to affect the loss of my roof."
The new requirement stems from the turmoil seen after Hurricane Katrina, when disputes about whether damage was caused by wind or water slowed or stopped insurance payouts.
That's a situation the S.C. Department of Insurance would like to avoid.
"If these people had flood insurance, these matters are very easily resolved and people are quickly paid," said Smitty Harrison, director of the wind pool, also known as the S.C. Wind and Hail Underwriting Association.
"About 70 percent of our policy holders have flood insurance," Harrison said. "What we're trying to do is encourage the other percentage to obtain the coverage."
Some local insurance carriers said they offer flood insurance for $300 to $350 for a $250,000 home that's not in a flood zone. It's hard to say the average rate for a home in a flood zone because there are dozens of variables that determine the rate, said Tim Baxley, president of Statewide Insurance Group, an agency with offices in Myrtle Beach and Pawleys Island.
Still, that's not an easy price to pay for some homeowners, said Barbara Horner, a retiree who lives two blocks from the ocean in Myrtle Beach.
"This is getting to be a real problem with a lot of retirees and people who are on fixed incomes," she said.
Horner is in a flood-prone area and agrees that having flood insurance is crucial, but she said it's an additional burden for coastal homeowners. On top of the insurance cost, she had to pay more than $400 to get an elevation certificate for her insurance agent to determine her rate.
Residents farther from the coast have been baffled about why the state wants them to get flood insurance when they're not in what the Federal Emergency Management Agency deems a flood zone.
Harrison said that all areas are susceptible to flooding, especially along the low-lying coast where development has left less place for stormwater runoff.
Damage from rainfall - which can affect homes inland, too - is also covered under flood insurance.
"The entire state is in a flood zone, every square inch," Harrison said.
Insurance agents are quick to point out that 30 to 35 percent of flood losses occur in areas that are not high hazard, according to the National Flood Insurance program.
"We're in the Lowcountry," said Ginny Taylor, part-owner of Anderson Insurance Associates LLC in Pawleys Island. "If we have a hurricane that drives in that water, they're going to be glad they have [flood insurance]."
Contact JESSICA FOSTER at 626-0351.
--------------------------------------------------------------------------------
ONLINE
Find out your home's risk for flooding at MyrtleBeachOnline.com/money.
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
~~~~~~~~~~~~~~~~
Sun News article
Posted on Fri, Apr. 11, 2008
Director: Wind Pool Working
By Jessica Foster
"S.C. Department of Insurance Director Scott Richardson told a crowd of about 80 Grand Strand residents Thursday that the department's plan to resuscitate the homeowners insurance market along the coast is working, despite the increases many of them are seeing in their rates.
People who attended Thursday's public hearing were upset about rate increases of up to 120 percent since the wind pool - the state's coastal insurance market of last resort - was widened in 2007.
Richardson acknowledged there have been hefty increases in what people pay for homeowners insurance in the newest portion of the wind pool. Part of the increase was also because, since Hurricane Katrina, risk modeling and rating standards were revamped for insurance companies.
But he said the wind pool expansion brought good things, too: It prevented about 33,000 policy cancellations, it's enticing new companies to move into the market, and it could mean a more competitive market with lower premiums down the road.
"We feel like the things we're trying to do are working," he said.
The Omnibus Coastal Property Insurance Reform Act, passed in 2007, created a bigger, multitiered wind pool where people closest to the coast could get wind and hail insurance when they couldn't get it through the standard market.
It also established a grant program for people who make their homes more wind-resistant and requires that the state insurance director visit the coast once a year to talk about the wind pool rates, coverage area and other issues.
Mel Renkey, who lives in Prestwick off S.C. 544, told Richardson he appreciates that the department kept thousands of insurance policies from being canceled. But he echoed the primary concern of most attendees: the skyrocketing cost.
The idea behind enlarging the wind pool was to keep insurers writing for the coast. In the wind pool, insurers can exclude the more risky wind and hail coverage from their policies.
Proof that the plan is working: A handful of new companies have started writing policies for the coast since May and more are waiting to be licensed, Richardson said.
New companies to South Carolina are Ironshore Insurance, Lancashire Insurance Co., Homewise Preferred Insurance Co., Southern Fidelity Insurance Co., Privilege Underwriters Reciprocal Exchange and Florida Peninsula Insurance Co. Most recently approved was Fidelity Fire and Casualty Insurance Co., licensed Monday.
Smitty Harrison, director of the wind pool, also known as the S.C. Wind and Hail Underwriting Association, said public hearings in 2007 were a different story.
Hundreds of coastal residents showed up demanding that the wind pool be expanded to ease insurance costs.
Department officials knew the expansion would cut premiums for some people in the former wind pool area and cause an increase for those in the new wind pool.
Thursday, attendees were angry that they were subsidizing insurance for beachfront homes even though they lived miles from the water.
"We've heard a lot of those same comments: 'Why did you do this?'" Harrison said. "When we were here before it was, 'You've got to do this.'"
Richardson said the department is considering a payment plan for people who get wind and hail coverage through the wind pool.
It's going to be about a three-year process gauging the full effect of the changes, he said, but the worst of the rate increases should be over once this renewal cycle ends in the next five or six months.
The state needs about 20 more companies to create a truly competitive insurance market along the coast, and insurance department officials are actively recruiting, he said."