Lawmakers want new state-owned insurer
A bipartisan coalition of lawmakers, spurred by a shake-up in the S.C.
Department of Insurance and frustrated by soaring premiums, called for a new
state-owned body Wednesday to insure property owners in all coastal
counties, not just those on the shoreline.
The measure, sponsored by Senate President Pro Tem Glenn McConnell,
R-Charleston, would also strip the governor's office of power over the
Insurance Department by making the commissioner an elected, rather than
appointed position.
A separate proposal called for a Senate committee to investigate operations
at the Insurance Department.
Under Gov. Mark Sanford's tenure, the agency has been rocked by controversy
and criticism. Eleanor Kitzman, who has led the department for the past two
years, resigned Tuesday after pushing to expand areas covered by
state-sponsored insurance, an idea that Sanford has argued against.
"I am not up here to bash Ms. Kitzman or anybody at the Department of
Insurance," McConnell said on the Senate floor Wednesday. "I am not here to
jump on it and say someone did a bad job. I am here to say we've got a
problem. ... I am up here because I am really fed up."
The bill, which was modeled after similar programs in Florida, Hawaii and
Gulf Coast states, would create a tax-exempt state authority that could sell
bonds to insure properties in all coastal counties. The proposal would scrap
the state's current wind pool, a narrow strip of shoreline where property
owners who have run out of options can get coverage from an association of
insurance companies. Consumers in the rest of the state would be able to buy
state-backed insurance on a case-by-case basis.
Joel Sawyer, a spokesman for Sanford, said that the measure would get the
state further into the insurance business, exposing taxpayers to greater
risks.
"We're encouraged that Sen. McConnell said this is a starting point," Sawyer
said.
Although the South Carolina coast escaped the winds of Hurricanes Rita and
Katrina, the storms devastated the insurance market here. Wary underwriters
have raised premiums up to four-fold, while others have abandoned an
estimated 20,000 policies and left the coastline entirely.
"You got people ... that have paid insurance companies for 40 years - one
lady for 41 years," McConnell said. "They got her money for 41 years without
a claim, and they're just walking away from the risk."
The legislation filed Wednesday would also preclude insurance companies from
"cherry-picking" clients. Underwriters that do not offer hurricane coverage
for properties near the ocean would not be allowed to do business nearby if
the measure becomes law. Underwriters who decide not to renew a policy would
be required to warn homeowners 100 days before dropping coverage.
"You either get in there and compete or you're going to lose the market,"
McConnell said, noting that insurance companies that do business in the
state have pocketed "fat, big profits" in the past three years.
McConnell's proposal and its passionate endorsement came on the heels of a
shake-up in the state Insurance Department. Following Commissioner Kitzman's
Tuesday resignation, Sanford on Wednesday tapped Sen. Scott Richardson, a
Republican from Hilton Head, to replace her. Kitzman had pushed to expand
the state's wind pool, a proposal that Sanford has argued against.
Richardson, like Sanford, endorsed "market-based" efforts to combat surging
premiums Wednesday.
McConnell said that an elected commissioner would give the department a
"consumer-protection" focus.
Sen. Gerald Malloy, D-Darlington, who spoke in favor of the insurance
overhaul Wednesday, filed separate legislation that calls for a senate
committee to investigate operations at the Department of Insurance. He said
the General Assembly needs to find out why rates have surged and why there
has been so much turnover in the commissioner's office.
"We want to see those e-mails. We want to see those letters," Malloy said.
"We want to see if anything could have been fixed before we make a decision
on the legislation before us."
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