Concurring with a series of House amendments, the South Carolina State Senate approved a bill Thursday that creates a flex-band rating bill for homeowners’ insurance, similar to that enacted for the state’s auto market in 1999. The bill now goes to Republican Gov. Mark Sanford, who is expected to sign Senate Bill 686 into law, according to the National Association of Mutual Insurance Companies (NAMIC).
“NAMIC applauds members of the South Carolina Legislature for their resolve in wanting to bring more competition to the state’s homeowners’ market,” NAMIC State Affairs Manager David Reddick said. “NAMIC recognizes as well Insurance Director Ernst Csiszar for the leadership that he has shown on this issue.”
Reddick added that he has had private conversations with NAMIC members in recent months, who have an interest in wanting to write homeowners’ coverage in South Carolina, but were waiting to view the outcome of this legislation.
“I trust Director Csiszar and his staff will adopt the tactic that Louisiana is currently using, and will actively recruit new carriers to the state.”
Louisiana Insurance Commissioner Robert Wooley, with some financial assistance from the industry, has met with companies around the country to encourage them to take a second look at his state in light of legislation enacted there last year that created a similar flex-band rating system.
SB 686 creates a flex band system that would allow personal lines insurers to increase or decrease rates within a 7 percent band without needing prior approval from the insurance department. The introduced version of the bill called for a 10 percent band. The new file and use system applies to rates for fire, allied lines, and homeowners’ insurance policies. The cap does not apply on an individual basis.
The bill was initially introduced by the insurance department in late 2003, but did not move out of the Senate Insurance Committee until late January of this year. The bill then remained dormant as department staff worked with a handful of senators to resolve problems with different aspects of the bill. The bill passed the Senate on April 28.
Industry observers, including NAMIC, reportedly had issues with some of the Senate amendments, including one that would have required insurers to consider “location” when considering writing homeowners’ coverage.
The House Insurance Committee removed this provision on May 19, paving the way for full House passage on May 27.
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