South Carolina Homeowners Have to Contend with Weak Insurance Regulations

07 May
Historic Home in South Carolina

A porch view from a historical home in South Carolina.

South Carolina homeowners have to not only contend with tax hikes and fuel price rises but also a body of weak insurance regulations in their state that inconvenience them and also sometimes compel them to pay out premium amounts that are hardly justified. The Department of Insurance in South Carolina surely needs to look into the some of the most critical irregularities in its policies and/or regulations to serve residents better.

Lack of Information on Competitive Prices

One of the greatest impediments that South Carolina homeowners face when shopping for insurance policies is the sheer lack of information about the prices offered by the various insurance companies in the state. The Insurance Department of South Carolina (DOI.SC.GOV) has put up on their website a list of homeowners’ policies by only some of the scores of insurers operating in the state. This is too scanty an information base to help homeowners make the right choice. And to compound matters, the website does not update information about rate hikes. So, the prices of the policies listed on this government site are not always accurate. What is more, this list only includes the rates for newer homes. The insurance policies drawn out on old homes in South Carolina are pricier.

Insurance Price Hikes without Approval

The Insurance Department in South Carolina had adopted a free market stance after scores of insurers in the late 1990s pulled out of the storm- and wind-ravaged coastal areas of the state citing large-scale losses. The government did try to serve the interests of homeowners in these areas by bringing more coastal residents under the ambit of the wind hazard coverage program of the S.C. Wind & Hail Association. But this is an expensive measure and can only be extended to a limited number of homeowners. So, with more home insurers threatening to pull out of this market, the Department passed a regulation that allowed insurance companies to increase their rates without needing government approval as long as the hike was less than 7 percent on an average throughout the state.

Domination by a Few Large Insurance Corporations

Although the home insurance sector in South Carolina has seen many new entrants in the recent past, it continues to be dominated by only a handful of insurance companies. In fact, only 11 insurers control more than a whopping 70 percent of the home insurance sector. This lack of competition in the homeowners insurance market means that policy prices are mostly dictated by the whims of the insurers rather than by market dynamics and homeowners have to often fork out more than what can be justified.

Inherent Internal Problems that Plague the Department of Insurance

The Department of Insurance is grossly under-staffed to handle a burgeoning and complex body of tasks that includes managing the credentials of hundreds of thousands of licensed insurance agents and adjusters, addressing thousands of complaints from customers over phone and through mails, and processing countless more rate filings. It is thus not surprising that the Department would falter on some parameters. Unfortunately, it is the homeowners who have to bear the brunt.

The above-mentioned problems can only be addressed if the government itself sits up and take notice. Meanwhile, homeowners in South Carolina can only hope that more insurers enter the market and level the playing field.

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