Analysis of the South Carolina coastal property insurance market
This paper aims to clarify the debate over property insurance rates and provide a basis for rational discussion of the current situation in South Carolina’s property insurance market. The paper examines how property insurance works, how it functions in coastal South Carolina, the business climate surrounding insurance, how insurers determine rates, and the roles of statistical modeling and reinsurance. The paper also examines post-event “assessments”—special taxes imposed after major disasters—and compares South Carolina’s system to those of other states.
In general, the paper concludes that South Carolina has insurance regulations that are typical of such regulations elsewhere in the nation, rates squarely in the middle of those in other coastal states, and prices that are reasonable, given the risk. If South Carolina wants to improve its insurance market and reduce rates for consumers, it should work to help homeowners protect their residences against nature’s worst and attract more carriers to the state. The bottom line is simple: although it is not perfect, South Carolina’s homeowners insurance system is a rational one that serves consumers well.
