According to the Alliance of American Insurers, a bill introduced in the South Carolina Senate will put the state’s regulation of insurance light years ahead of any other and benefit homeowners by introducing more competition into the market.
“The bill [SB 686] provides sweeping regulatory modernization reforms that will help provide a robust and competitive insurance market for personal lines consumers,” said Robert Herlong, vice president of the Alliance’s Southeast Region.
Introduced by state Sen. David Thomas (R-Greenville) as the Property and Casualty Personal Lines Modernization Act, the bill proposes an initial flex-band approach for homeowners rates in which insurers would be able to increase or decrease premium rates within a band of seven percent above or below the current rate without prior approval. This system would then morph into a use-and-file method for all personal lines rates, effective Jan. 1, 2006.
“Sen. Thomas and the Department of Insurance should be commended for taking an approach to insurance regulation that eliminates upfront regulatory review of homeowner rates, but does not jeopardize consumer protections,” Herlong said.
In 1999, the South Carolina auto reform act eliminated the rigid prior approval system and went to a “flex rating” approach for that line of business. “As a direct result of this reform measure, there has been a significant increase in the number of auto insurers writing business in South Carolina,” said Rita Nowak, assistant vice president of property/casualty for the Alliance. “It also caused a rapid depopulation of the costly residual market facility. The Alliance anticipates similar results in the homeowners lines if this bill passes.”
The Alliance has actively participated on the South Carolina Coastal Property Insurance Task Force that was established by the Department of Insurance to address the state’s coastal property issues and to attract more property writers to the state. This task force recommended several of the key provisions contained in this bill.
Herlong said he “believes there is strong support for SB 686; however, the legislative calendar will be a challenge – the session ends June 5.”
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