Sanford press secretary Joel Sawyer would not say who the replacement will be, but lawmakers familiar with the situation said Sen. Scott Richardson, R-Beaufort, is a top candidate.

"No comment" is all Richardson would say Tuesday when asked if he was going to be the new insurance commissioner.

The change in leadership comes at a time of immense pressure on the department as Sanford and legislators deal with a blooming crisis of property insurance for coastal homeowners.

Insurance giant Allstate said in December that 12,000 homeowners in coastal counties would lose their policies this year. The company blamed increased hurricane risk as one factor in its decision.

About 26 percent of homeowners' policies in South Carolina are for coastal customers -- about $150 billion worth of properties.

Sawyer said Kitzman and Sanford met last week about "the need to possibly go in a new direction." He said there was no disagreement between the two.

Kitzman was named director in February 2005. She is founder and former president of Driver's Choice Insurance. She sold the agency in 2002 and remained as president until October 2004. Efforts to reach her were unsuccessful.

Much of the discussion about solutions to the coastal insurance problem has centered on the state's "wind pool," a state-run system created for homeowners who cannot get wind coverage from private providers.

Only a thin band of coastal property owners can participate. Some lawmakers want to widen the boundaries for the wind pool.

Last year, Kitzman suggested to Sanford that the boundaries be widened, Sawyer said. But Sanford questioned whether it would be appropriate or even legal.

The department, in a January report, said state law allows the boundaries to be widened only in specific circumstances and that the current situation did not qualify. Kitzman said the same thing two weeks ago before a House subcommittee studying the issue.

In an interview with The State on Tuesday, before it became public knowledge she was resigning, Kitzman suggested it could be done.

Kitzman said "in an ideal situation, the residual market (wind pool) would be very small."

If the overall rates for customers in the pool are high enough, she said, companies can offer lower rates to some of those in the wind pool territory, discouraging reliance on the system.