Posted on Tue, Aug. 29, 2006

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Wind pool move planned

Homeowners pack insurance forums

By Jenny Burns

The Sun News

REBECCA KOENIG/The Sun News

Homeowner Denny Laczo speaks during the insurance forum Monday at Myrtle Beach Middle School. About 1,000 residents who were concerned about rapidly increasing coastal property insurance rates packed the gym.

More photos

• REACTION: What people said

The S.C. director of insurance said she believes there is a lack of availability of insurance along the coast, and she is planning to move the state's wind pool line, but she doesn't expect the change to have any immediate effect on rates.

"It appears that the market for coastal property insurance is deteriorating drastically," said Director Eleanor Kitzman.

At two packed insurance forums in Horry and Georgetown counties on Monday, homeowners told the director and local legislators about the 100 to 700 percent rate increases they've seen in their insurance premiums, and asked how those on fixed incomes were going to pay that kind of money.

Several legislators also offered their ideas on solutions to the crisis, and asked the director to expand the wind pool as soon as possible.

The new wind pool line would generally move to the Intracoastal Waterway in both counties, Kitzman said at the Georgetown County meeting.

The wind pool is currently an area east of U.S. 17 Business, where homeowners can get wind coverage when they can't buy it through the standard market.

Kitzman said the order to move the line would be entered this week, and the wind pool, or S.C. Wind and Hail Underwriting Association, would then file for a new rate.

Kitzman estimates it will be about 45 days before the wind pool can start writing policies in the new territory.

Because the wind pool rate will be a market rate, she doesn't expect it to be cheaper than companies are currently willing to write policies for.

Moving the line will increase insurance availability, however, and possibly attract companies to the area since they know they can write policies without wind coverage.

Kitzman is concerned that moving the line could keep new carriers from choosing to do business in South Carolina, because all carriers can be assessed if the wind pool has a large loss. Those assessments can then be passed on to consumers across the state, not just along the coast.

At the first forum in Murrells Inlet, residents heckled the director, upset with Kitzman's explanation of the market forces causing the insurance increases.

One man called out, "Are we paying for an increase for what might happen?"

The second forum drew about 1,000 people in a packed gymnasium at Myrtle Beach Middle School, where residents were given time to ask the director questions.

Sen. David Thomas, chairman of the Banking and Insurance Committee, told attendees he wanted to look into the idea of co-op insurance to allow citizens to insure themselves. He wants his committee to start meeting in the next few months to come up with solutions for the next legislative session.

Local builder Tripp Nealy said new safer building codes had been implemented in the past several years that should have lowered insurance costs. He said rising land costs caused property values to rise, but the cost of rebuilding has not increased as much as values.

Thomas said his committee would look into this.

"We need to get to the bottom of how rates are being set and if companies are not taking [building] code changes into account, then something is wrong," Thomas said.

Sen. Ray Cleary, R-Murrells Inlet, and State Rep. Nelson Hardwick, R-Surfside Beach, said the law should be changed so insurance companies can hold reserves, which could then be used to pay for future losses.

During the Murrells Inlet meeting, Cleary also suggested forming a national catastrophe fund that would work similar to federal flood insurance and would be offered to homeowners in areas vulnerable to catastrophes like hurricanes, tornadoes and earthquakes.

Myrtle Beach condo owner Dane Frye, who has seen his condo association insurance go up 500 percent, suggested the same idea to legislators.

Sammy DeRemigio, homeowner's association president for Waterway Village where insurance has increased from $126,000 to $879,000, said he was glad to hear the idea of self-insurance brought up.

Moving the wind pool line to the waterway wouldn't help his residents struggling to pay the increase because he's west of the waterway, he said.

Some homeowners that came to the meetings said they got all their questions answered, while others weren't satisfied.

"She didn't seem to give us any indication of solutions except for the wind [pool line] shift," said Louis Picciola, owner at Sweetwater condominiums, where insurance premiums jumped from $550 a year to $3,850 a year.

Kay Schneider, who also lives at Sweetwater, said she learned a lot about the market forces behind the rate increases, but that doesn't help her situation. She's retired, but has to go back to work to pay her insurance increase. She downsized from a single-family home, and now wishes she hadn't.

"My HOA fee is now higher than my mortgage," said her neighbor, Norman Rheaume.

Legislators and officials said they were satisfied with the information they received on the problem from residents.

"I think the delegation now has a good feel for the depth of the gravity of this problem," said Sen. Dick Elliot, D-North Myrtle Beach, who called the forum.

Brad Dean, Myrtle Beach Area Chamber of Commerce president, said there were "a lot of questions and very few answers," but at least it's a starting point.

The director, insurance agents and legislators disagree on whether moving the wind pool line will lower rates.

Dean said the line needs to be moved, but more legislative solutions are also necessary.

"If we can't find a way to hold down rapidly rising premiums, many residents won't be able to live and work on the Grand Strand," he said.