Issues
The Crisis in Hurricane Insurance
Over the past few months, your patience and understanding has allowed me the opportunity to thoroughly research possible solutions to the serious problem of runaway insurance costs affecting our coastal area and the entire state. It has also given me the time to hold important conversations with our legislative leadership.
Your input has been invaluable … from our meeting in Murrells Inlet to the scores of personal Emails, letters and phone calls I have received. Working together with Governor Sanford and legislators from across the state, we must develop prompt and reasonable solutions to this serious problem that not only affects South Carolina’s economy, but the very ability of individuals to survive.
I have listed below a number of possible solutions which I have suggested to other leaders in our area and around the state – and which I am now actively pursuing on your behalf. No single solution will solve this problem, but some combination of these changes will pave the way for the relief we need and deserve.
I have drafted and submitted a bill that would make our State Insurance Commissioner an elected position. Although I support the Governor’s overall effort to streamline government by placing several constitutional offices within the Governor’s Cabinet, it is painfully obvious that we need a commission who relates to and has sympathy for the citizens of this state.
Expand the “Wind Pool” (the area most directly affected by Hurricane force winds). When our current commissioner spoke about this in March, she appeared totally befuddled. While this effort may not provide direct economic relief, most knowledgeable sources have emphatically recommended it to me as a key to solving the problem.
Develop a New Model for Insurance (both in and out of the Wind Pool) – for example, certain levels of cushion and varying deductibles – the first $100,000 to $200,000 insured one way, with higher levels insured another much like Flood Insurance. This New Model would allow firms to hold funds in “Tax-Free Catastrophic Reserve Accounts” similar to banks with their loan loss reserve status – in other words, to establish “rainy day accounts.”
Develop State Tax Credits to improve the Hurricane Rating for Structures and provide matching grants for the elderly and those with low incomes.
Create a “Catastrophic Insurance Account” similar to a Health Savings Account that is tax deductible for both individuals and cooperatives (such as condominium associations).
Create a model similar to a “cooperative” that can be formed using these techniques that would eventually provide opportunities to attain 60-80% self-insurance.
Urge that the entire State delegation petition our federal legislators to review these issues and consider creating a Federal program similar to “National Flood Insurance.”
My research has proven that it is possible to realize a 25% decrease in premiums by increasing the deductible by only 5%. In addition to achieving desperately needed savings, we must achieve the goal of removing ourselves from under the thumb of a few giant insurance companies. We can begin to effect change by developing strategies that increase competition among carriers and expand their capacity to service the needs of the Coast.
With the 2007 Legislative Session now underway, I will keep you advised about the progress of these programs and I encourage you to continue providing me with your input on these and other issues vital to our quality of life.
