Insurance program is experiencing an exodus of policyholders
Homeowners are beginning to pull out of South Carolina’s wind pool insurance program. The program exists as a last-resort option for those seeking insurance coverage in the state. The program is primary meant to provide coverage to properties that exists along the state’s coastlines, where wind damage is somewhat common. Many insurance companies in the private market do not offer wind protection alongside their homeowners insurance policies, which has made the state’s insurance program relatively popular, until very recently.
Population of state’s insurance program has dropped by 14% since August 2011
At the end of May, the state’s program boasted of some 40,625 policies, with $89 million in premiums coming in every month. This is a 14% decrease on the numbers the program had reported in August of 2011. The primary reason why homeowners are leaving the program behind is the fact that insurance companies are finally beginning to offer wind protection. In some cases, the protection that these companies are selling is less expensive than what is being offered by the state’s program.
Customer exodus may have an impact on those still receiving coverage through state’s program
While many homeowners are finding savings by leaving the state’s insurance program, those still receiving coverage through the program could be impacted by the exodus. As more people exit the program, the amount of premiums that it collects on a monthly basis is beginning to decline. This will eventually put the program in a precarious financial situation, which can only be remedied by raising the premiums on the coverage it provides. Higher rates may help resolve some financial tension, but it may also drive away more homeowners.
Insurers are becoming more comfortable with providing coverage to certain markets
In the past, insurers have been wary of providing coverage for coastal properties because of the risks that they represent. Many companies are simply not equipped to handle the impact of major natural disasters that are becoming more common in coastal regions. Insurers are becoming more adept at gauging and mitigating risks, however, and some are beginning to test their new risk management strategies by entering into “dangerous” markets.