Date Published: February 7, 2007   

Sanford urged to deal with coastal insurance costs

The Associated Press

The leader of the state Senate says insurance companies are using hurricane fears to take advantage of consumers and regulators are doing too little to solve the problem.

Senate President Pro Tem Glenn McConnell has introduced a bill creating the South Carolina Hurricane Underwriting Association. It forces insurers to write coastal insurance coverage on their own or offer it through that state-run pool.

"The private market has failed," said McConnell, R-Charleston.

The program would begin with $100 million from a catastrophe fund the Legislature set up last year. It would grow in years without catastrophes. But if a storm is bad enough to wipe out the fund, insurers and customers using the association would pay more to cover their losses, McConnell said.

The legislation also bars insurance cancellations 100 days before hurricane season starts and calls for popular election of the state's insurance director.

While Gov, Mark Sanford likes the cancellation notice idea, he is not as keen on the rest of the proposal, spokesman Joel Sawyer said.

"At first blush, this bill gets the state into the insurance to such a degree that, at some point, the taxpayers can end up holding the bag," said Sawyer, who added the governor wants to work with lawmakers on the issue.

Earlier Wednesday, Sanford talked about the need for free-market approaches and tax incentives to deal with the insurance crisis as he nominated state Sen. Scott Richardson, R-Hilton Head Island, to be the new state insurance director. Richardson replaces Eleanor Kitzman, who resigned Tuesday.

Other states, including Florida and California, have taken the wrong approach to disaster insurance by setting up government programs or more closely regulating the industry, Richardson said Wednesday.

"You're ultimately going to hurt the consumer if you go down that road," Richardson said.

Kitzman stepped down after Sanford said he wouldn't go along with her plans to expand a hurricane coverage program that now covers a strip of land right on the coast to property farther inland.

Expanding the "wind pool" program could crowd out private insurers and would unfairly exclude some consumers, said Sanford, who instead supports a broader approach, including tax credits for people who make their homes and businesses more storm worthy.

Richardson said it could take more than a year to come up with a new approach. But McConnell wants something done immediately.

"We are not going to sit here and wait for somebody to come up with a solution," McConnell said.

Consumers and businesses also want fast action. On Tuesday, coastal tourism leaders met with Sanford in Spartanburg and called on him to make sure insurance is available and affordable along the coast, the heart of the state's $16 billion tourism industry.

"There's going to be a lot of blood in the streets of Myrtle Beach if something doesn't happen," Doug Wendel, chief executive of Burroughs & Chapin Co. Inc., said.

"The worst thing that you can do would be to do nothing," said Brad Dean, president of the Myrtle Beach Area Chamber of Commerce. "It's like a patient is bleeding to death and the doctors and nurses are arguing about what size bandage to put on."