Tax credits, deductions included in proposal
Mount Pleasant property owner John Fill received a call this week from his
insurance company. He had been a customer for 12 years and had not made a
single claim, but the company, Allstate, told him his homeowners policy
would not be renewed.
Lula Orr, a lifelong North Charleston resident who grew up two blocks from
where she lives today, was recently dropped by her insurance company, State
Farm. The 85-year-old owns three properties, two of which she rents out. She
was a State Farm customer for 57 years.
"I had two claims," she said. "I was never late with a payment."
Fill and Orr are looking for new insurance companies, but they have more in
common: their homes are not in the wind pool, even though the state Director
of Insurance Scott Richardson said this week the agency will expand the
territory, effective March 30.
Gov. Mark Sanford and Richardson the agency will expand the territory,
effective March 30.
Gov. Mark Sanford and Richardson announced Thursday a plan they say will
bring relief to embattled homeowners. The state's largest insurance
companies have dropped customers such as Fill and Orr by the thousands since
the summer. Others have seen rates increase by 400 percent or more.
"There is a basket of things here that are fundamentally based on trying to
avoid mistakes that have happened in other places," Sanford said. "Florida,
we do believe, got it wrong, and you've seen a mass exodus of many insurers
from that marketplace."
Richardson said those companies are looking to do business in other states.
He said tax incentives for homeowners and insurance companies will correct
what many are calling a coastal insurance crisis in South Carolina.
The first part of the plan is the expansion of the wind pool, which extends
coverage to portions of Johns, James and Edisto islands but does not include
the peninsula, West Ashley, Mount Pleasant or North Charleston.
The tax incentives and other proposals will require legislation, which is
being drafted and is expected to be introduced soon in the House and Senate.
"The wind pool expansion is the Band-Aid that needed to be applied," said
Rep. Harry Cato, R-Travelers Rest, chairman of the House Labor, Commerce and
Industry Committee. "Now, we're looking to have the surgery to make sure
we're improving the system."
Officially called the S.C. Wind and Hail Underwriting Association, the wind
pool is a consortium of insurance companies that do business in the state.
The territory it covered in the Charleston area before the expansion
included only the barrier islands of Kiawah, Seabrook, Folly, Isle of Palms,
Sullivan's Island, and a small strip of mainland east of U.S. 17. The
proposed bill:
--Redraws the wind pool territory to include the areas in the greatest level
of crisis. It would also include a tiered rating system, which probably
would result in rate increases for some homeowners. Under that system, the
farther from the coast, the lower the rate would be.
--Establishes tax deductions for the creation of "self-insured" hurricane
savings accounts up to $250,000.
--Provides more options for insurance coverage by changing the way premiums
are configured, including setting different levels of deductibles.
--Offers income tax credits for the purchase of building supplies, such as
storm shutters and other measures to make homes more resistant to hurricane
damage.
--Requires private insurance companies to give property owners discounts for
making homes and businesses more storm resistant.
--Provides tax credits for lower-income residents who are paying more than 5
percent of their income for insurance.
--Gives tax credit incentives to insurance companies to encourage coverage
in coastal areas.
--Requires at least 30 to 60 days notice for policy cancellations or
non-renewals.
Richardson said the proposed incentives seem to be enough to draw at least
three or four new companies to the state.
"There's nothing you can do that will help consumers more than make the
insurance companies think that you are a market-driven state," he said.
Richardson couldn't immediately provide specific figures for projected
premium rate savings, or the number of new homes or businesses that would be
covered in the wind pool expansion.
Richardson was able to move the line to cover more ground under an emergency
order that can last up to two years. The Legislature will have to approve
any permanent shift.
Senate President Pro Tem Glenn McConnell, R-Charleston, said the Senate will
assess whether to expand the line even farther inland. "It still doesn't
answer the problem of insurance companies being able to collect decades of
premiums and just drop people cold," said McConnell, who has also introduced
reform legislation.
Wind pool coverage expanded
With the wind pool expansion, some consumers may find coverage at cheaper
rates than so-called ''surplus'' insurers, often overseas companies that
insure the riskiest property. For folks outside the wind pool, which
includes property owners in most of Charleston and Mount Pleasant, the
surplus market may be the only option for property owners who have been
dropped by their insurance companies.
Insurance forums
Homeowners with questions or complaints about insurance can get answers next
week.
Here's the schedule:
MONDAY: 5:30-7 p.m., Mark Clark Hall Buyer Auditorium at The Citadel in
downtown Charleston. Insurance Commissioner Scott Richardson is host of a
public forum.
TUESDAY: 8:30-10:30 a.m., the Charleston Metro Chamber of Commerce on
Speissegger Drive in North Charleston.
Department of Insurance staffers will meet one-on-one to discuss homeowners'
complaints. Appointments are required.
To schedule an appointment with an Insurance Department staffer, call
1-800-768-3467.
Homeowners also should complete a South Carolina Coastal Issues Complaint
Form and return it to the Department of Insurance via mail, fax or e-mail by
5 p.m. Monday.
To download the form or for more information, visit the department's Web
site at www.doi.sc.gov
or call 1-800-768-3467.
The complaint form also will be available at noon today at the
administrative offices of the cities of Charleston and North Charleston, the
towns of James Island and Mount Pleasant, and Charleston County Library
branches.
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