South Carolina lawmakers are investigating rising insurance costs as homeowners report steep hikes, unfair practices, and calls for reform.
COLUMBIA, S.C. — South Carolina lawmakers are questioning why insurance rates keep climbing and what can be done to ease costs for families, while some are accusing insurance companies of discriminating against certain groups.
Doug Quinn, a homeowner who testified before the panel, said his insurance company failed him after a natural disaster swept through South Carolina and he lost his home. He says his company falsified an engineering report and refrauded him.
“Despite paying an exorbitant price for the maximum legal amount of insurance coverage, it took me seven years to rebuild and return back home,” Quinn said.
A special House committee has been studying insurance rates for months, from fraud, to tort reform, to protections for policyholders. Opinions differ on which of those issues need to be address upfront, with some lawmakers pushing back against any concessions to insurance companies.
Rep. Gary Brewer, who chairs the committee, said they want to make the state’s insurance market more competitive, and push rates down.
“A lot of homeowners are really upset their insurance rates have gone through the roof. And here we are in storm season, and we’re talking about insurance. A lot of car insurance issues have been going up too,” he said.
The Consumer Federation of America estimates that South Carolina families are paying about 17% more for home insurance than they did three years ago — an average increase of about $400 a year. The group says the higher costs have pushed about 9% of homeowners in the state to drop their coverage entirely.
Policyholder advocates say the problem isn’t an industry crisis, saying insurance companies spend millions on ad campaigns but claim that they’re struggling and have to push rates up.
“The insurance industry is not in an insurance crisis, they’re following a cycle. And when things get ugly, they blame us,” said Douglas Heller, Director of Insurance for the Consumer Federation of America.
Heller noted that companies can charge people more based on characteristics unrelated to safety, like gender or credit score. He says a woman or someone with a low credit score will be charged much higher rates, regardless of any history of claims.
“If you have excellent credit and were convicted of drunk driving, you’re going to pay $1,000 less than the perfectly safe driver who happens to have poor credit,” he said.
Heller testified that those facing higher rates are more likely to drop coverage all together, leaving so many low-income people uninsured.
“These are not wealthy people who say, you know, I’m going to self-insure,” Heller said. “These are low-income homeowners in communities of color, manufactured homeowners, rural homeowners. Those are the ones who are going uninsured because they can’t afford the coverage.”
Lawmakers are considering legislation that could prevent insurers from using certain characteristics when setting rates. Brewer said the committee’s recommendations are expected to lead to multiple bills when the General Assembly returns in January.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.