Insurer joining coastal exodus

State Farm to drop about 1,000 policies in South Carolina State Farm agent Billy Swails of Mount Pleasant learned last week that the insurance giant was preparing to drop some homeowners policies along the South Carolina coast. His was one of them. State Farm, the largest property insurer in the nation and in South Carolina, is the latest carrier to pull back its coverage along the coast. The company said Wednesday it is paring about 1,000 policies within a narrow stretch of shoreline from Myrtle Beach to Charleston to Hilton Head Island. The cutbacks take effect May 1 and represent about one-half of 1 percent of State Farm's homeowners policies statewide, said spokesman Bruce White. Illinois-based State Farm will mail letters to affected customers beginning March 1. To cushion the blow, local agents such as Swails have started warning those clients, telling them to seek new coverage for their homes from other carriers. Swails, owner of Billy Swails State Farm off of Johnnie Dodds Boulevard and a Mount Pleasant Town Council member, appreciates the irony that his personal homeowners policy was among those cut. He's had to break the news to some loyal longtime customers. Swails said it's been difficult, but he knows how they feel. "I've been telling my customers they're like me," he said. "They're not smiling, but they understand. They live with it and move on." While no hurricanes made landfall in the state last year or in recent years, State Farm said it is reducing its exposure along the coast, where population figures and property values are on the rise. It said its goal is to maintain its financial strength and "deliver on the promises it makes to all South Carolina customers." This latest round of "nonrenewals," as the insurance industry calls dropped policies, will likely put further strain on the S.C. Wind and Hail Underwriting Association. Commonly called the wind pool, this group of insurers that do business in the state serves as a last resort for homeowners who can't get coverage for their properties through normal channels. White said about 60 percent of the affected State Farm policies will qualify for the wind pool, White said. Generally speaking, the local residential areas that fall into the wind pool territory are the barrier islands and a small strip to the east of U.S. Highway 17. The insurance industry has reported heavy losses after consecutive destructive hurricane seasons in 2004 and 2005. The storms ravaged some coastal communities in the Southeast, where real estate values and construction costs have appreciated rapidly. Yet over the last year, some of the nation's largest insurers, including State Farm, Allstate and Nationwide, have rebounded and reported record earnings. Even so, they've dropped customers by the thousands. In December, Allstate Corp. announced plans to drop 12,000 home insurance policies in eight South Carolina counties, including those along the coast. Last August, Nationwide shifted 1,900 policies to the wind pool, representing about 10 percent of Nationwide's coastal customers in South Carolina. The situation is so troubling that coastal property insurance has become a hot-button issue in the General Assembly. Sen. Ray Cleary, R-Murrells Inlet, has introduced three bills that include allowing free home inspections so homeowners can learn how to make their property more storm-resistant. He also is proposing to expand the wind pool to include properties farther inland. Senate President Pro Tem Glenn McConnell, R-Charleston, said last week that he is considering legislation that will prevent companies from picking and choosing the types of insurance they want to write in the state. "If you write one line of business, you'll have to write them all," he said.

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