Homeowner's Insurance Reform Passes in SC

The biggest victory for REALTORS® this week was the House concurring with Senate amendments to H.3820, the Omnibus Coastal Property Insurance Reform Act. This legislation addresses the lack of available and affordable property insurance coverage with which citizens along South Carolina's coast have been suffering and is the result of a nearly a year's work on developing a insurance reform package. Passage of this legislation into law is extremely important to South Carolina's statewide economy and is a priority on the SCAR quality of life agenda.

The bill represents policy recommendations made by the Governor and the SC Department of Insurance in their quest to develop a market-based solution to the property insurance crisis. The Department worked closely with the General Assembly to craft the legislation. The bill contains provisions that would: create catastrophe savings accounts, force insurers to give mitigation credits, establish incentives for insurance companies to write additional policies in the wind and hail pool zone, clarify the practices and procedures of the Wind and Hail Underwriting Association, establish a mitigation grant program, expand the cancellation notice period, and force insurers to reveal catastrophe models to the Department of Insurance.

The Senate amended H.3820 to allow for the formation of captive insurance companies to write primary and excess wind and storm surge property insurance coverage, essentially allowing large commercial projects to self-insure by holding capital reserves in excess of $1 million. Further, the Senate amended the legislation to make permanent the wind pool expansion that took effect in March. The 60-day cancellation notice period included in the House- passed version was extended to 90 days during the hurricane season under Senate amendments.
The Governor signed the bill into law on Monday, June 11, 2007 and held bill signing ceremonies in Myrtle Beach and Charleston. SCAR extends its appreciation to the South Carolina House of Representatives, the Senate, the Department of Insurance and Governor Sanford for making coastal property insurance reform a reality this session. While it remains to be seen how the market will adjust to the new law and how effective it will be in providing meaningful relief to homeowners, members of the General Assembly have not ruled out the possibility of making more sweeping reforms in the future.