South Carolina Windpool Shrinks as More Insurers Go Near Water

More private insurers are selling wind coverage to South Carolina coastal property owners, leading to a decline in the population of the state’s windpool, the South Carolina Wind and Hail Underwriting Association.

SCWH Executive Director Smitty Harrison Executive Director said most of the reductions are in the coastal counties of Beaufort, Charleston and Colleton counties, which include the barrier islands.

In August 2011, the windpool had 47,366 policies in force, representing $97 million in premiums and $17 billion in exposure. As of May 15, the numbers were 40,625 policies, $89 million in premiums and $14 billion in exposure.

Harrison said there are a number of reasons for the increased interest by the private market, including the belief that hurricane losses in the area are unlikely.

While the windpool covers only wind and hail damage, some large insurers including State Farm have begun expanding their coverage to multi-peril coverage that includes wind.

The soft reinsurance market is also having an effect. The windpool recently secured enough catastrophic coverage so it should be able to withstand up to a one-in-200 year storm.

“That reduces the chance we will send those insurers a large assessment,” said Harrison.

Oyango Snell, counsel for the Property Casualty Insurers Association of America (PCI), said the use of computer models has made it possible for insurers to better underwrite the coastal region.

“There is no smoking gun why carriers are coming into the state,” said Snell. “But consumers are finding better coverage at better prices.”

Still, Harrison cautioned that although the windpool has stabilized, it is not going to go out of business.

Director of Insurance Ray Farmer said the reduction in the windpool is good news. “I think this is a good thing to have the independent market back in South Carolina,” said Farmer. “We’ve made a concentrated effort to recruit homeowners insurers to write across the coast.”