Insurance solutions require balance, Richardson says

State Insurance Director Scott Richardson said Monday he knows firsthand what many coastal property owners are going through. A month ago, he learned his insurance company would not renew his homeowners policy. But fixing the coastal insurance crisis is a balancing act, he said, and a rushed move could mean a difference of thousands of dollars to some residents. Mount Pleasant and other areas locally were not included in a recent expansion of the wind pool territory because while it might have benefited a few hundred property owners, thousands more could have seen sharp premium increases, Richardson said. Speaking to about 125 people at a relatively low-key public meeting at The Citadel, the recently appointed insurance chief said he's trying to provide relief for coastal property owners while trying to attract insurance companies to the state and keep those already doing business here. The decision was made last week to expand the territory so companies may start writing policies on the coast again, he said. But if the line was moved too far, too many properties might have qualified for coverage. On Wednesday, Richardson signed an order to temporarily expand the wind pool territory. That order goes into effect Friday. The new territory will include parts of James and Johns islands, but thousands of residents in Charleston, Mount Pleasant and North Charleston will not be included. 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 covers in the Charleston area currently includes only the barrier islands and a small strip of mainland east of U.S. Highway 17. As it stands today, the association probably doesn't have enough reinsurance to cover the policies it holds, Richardson said. Reinsurance is basically insurance that insurance companies carry. "Frankly, the wind pool couldn't handle it," he said. Also last week, Richardson, together with Gov. Mark Sanford, announced a series of legislative and other measures to help lower costs for property owners. They include tax incentives, consumer discounts and other measures. Richardson also wants to introduce a tiered rating system for the wind pool, which probably would result in rate increases for some homeowners. Under that system, the farther a property is from the coast, the lower the rate would be. As new rates become clearer, greater expansion of the territory is possible, Richardson said. Moving the territory in phases is the only way to avoid sticker shock, he said. A decision could be made in about 90 days. "This is not in concrete," he said. "We could move it again." Members of the audience, which consisted of a number of insurance and real estate agents, were mostly quiet. Written questions were read by a member of the Charleston Metro Chamber of Commerce, which helped host the event. Lee Roeber, who lives in The Retreat condominiums on James Island, said after the meeting that insurance companies should be allowed to do business but not at unreasonable expense to home-owners. She said she'd like to see some sort of national catastrophe fund and a federal reserve fund to help lessen the financial burden on homeowners if a major storm hits. Others want insurance companies held more accountable. Since August, four of the state's largest property insurers have said they will not renew nearly 20,000 homeowner policies along the coast. Although many of the largest insurance companies took heavy losses from the 2004 and 2005 tropical storm seasons, they have rebounded with huge profits. Rachel Lindsay, chief executive of P&L Property Management in Summerville, said insurance companies should stick with their customers through thick and thin. "There's a basic rule of business that if you stay with people through the good times, you stay with them during the bad times," she said.

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