Posted on December 17, 2020
A temporary order extending the area where South Carolina’s residual property insurance market provides insurance has been renewed for another two years.
An order issued by South Carolina Insurance Director Ray Farmer says the renewal of the 2007 expansion of the South Carolina Wind and Hail Underwriting Association (SCWHUA) territory is necessary “to address those areas of the seacoast territory where essential property insurance coverage is still not readily available.”
Additionally, the order says the renewal of the expansion will also help market disruptions in areas with the most significant exposure to hurricane and other wind events.
The original expansion order was issued in March 2007 and has been renewed every two years since 2009. It gives SCWHUA, also known as the Wind Pool, the ability to offer wind and hail coverage in the coastal property markets in the state that are ineligible to buy coverage in the standard insurance market. Coverage is offered in five South Carolina coastal counties – Beaufort, Charleston, Colleton, Georgetown and Horry. Data provided by the SCWHUA on May 31, 2020 noted a policy count of 17,582 with more than $36 million in in-force premiums, as of Jan. 31, 2020.
The rate of growth in SCWHUA written premiums has slowed from 41% in 2007 to less than 1% between 2009 and 2011. The market’s written premiums hit a high point in August 2011 and has since decreased by nearly 66% from Aug. 31, 2011 and Oct. 31, 2020. Policy counts also decreased in excess of 66% and total insured limits decreased by 70% during the same period.
According to the new expansion order, the coastal property insurance market in South Carolina has stabilized thanks to expansion, which has improved the availability of coverage to South Carolina coastal property owners and reduced the number of consumers who were unable to find coverage.
Allowing the order to expire, “could result in significant market disruptions,” the order states.
Farmer’s order attributed the positive changes to improvements in the availability of reinsurance coverage; increased availability in the voluntary market, especially the commercial property insurance market; the expansions of the territory covered by the SCWHUA; and the consistency of the SCWHUA territory since its initial expansion in 2007.
“Insurers continue to seek to limit their potential losses in certain coastal regions,” the order states. “As a result, some consumers may have to difficulty finding essential property insurance coverage. The expansion of the SCWHUA territory has a been a safety net for those consumers. If the expansion is not renewed, there could be significant disruption in the coastal property insurance market.”
The new order takes effect upon expiration of the January 2019 order and will remain in effect until March 29, 2023 unless otherwise vacated or superseded by action of the South Carolina General Assembly.
In 1971, the South Carolina Legislature required the insurance industry to make wind and hail insurance coverage available to home and business owners in the coastal area. The association is under the direction of a board of directors which acts as the governing body for the organization.