The growing issue of skyrocketing insurance costs is making waves among property owners in South Carolina, particularly along the coastline. A recent town hall gathering convened state officials from the insurance sector to address concerns surrounding what some view as a looming crisis for homeowners.

Merrily Glaviano, a resident near Murrells Inlet, expressed her alarm at the dramatic increase in insurance rates, which have surged by several hundred percent over the past year or two. Even though her home is mortgage-free, the expenses associated with insurance through her community’s Homeowners Association (HOA) have triggered widespread anxiety in her neighborhood.

Glaviano lamented that they are shouldering the burdens of issues like California wildfires and distant hurricanes that have no direct impact on their area. The concerns raised by residents have been consistently communicated to state officials by ABC 15, both in March and May. Many neighbors are witnessing their property insurance premiums escalate to unmanageable levels, putting those on fixed incomes in a precarious financial situation.

Representative Tim McGinnis, who represents a densely populated community in Horry County, reported receiving a flood of emails from worried individuals as their monthly dues to HOAs surge by up to 600% in certain instances.

From south to north along the Grand Strand, residents are grappling with insurance policy costs that have doubled, or even more, due to factors like inflation, increased home repair expenses, recent natural disasters, and the global reinsurance market.

The South Carolina Department of Insurance (SCDOI) agency director, Micheal Wise, attributed the current difficulties to a challenging market cycle characterized by inflation and the impact of international natural catastrophes.

A recurring question is how South Carolina can safeguard consumers from the turmoil in the insurance market. The response from officials is that they regulate insurers to ensure premiums are allocated to a surplus reserve for claim payments, rather than being pocketed as profit. However, this approach is applicable only to “admitted” or primary carriers.

The predicament arises because primary carriers are reluctant to underwrite policies in high-risk coastal communities, leaving residents to turn to the surplus lines market, where HOA communities are finding coverage, as per reports from neighbors.

For example, the Edgewater community in Carolina Forest relies on over a dozen carriers, including the state’s safety-net agency, SC Wind and Hail Underwriters. While efforts are made to communicate with surplus lines carriers, they typically operate from outside the United States.

Even though some carriers only insure homes in specific areas of the state, they are still contributing to a collective pool that supports claims in other regions. Consumer Service officials at SCDOI handle various insurance-related needs and can be reached on weekdays at 803-737-6180.

Regarding the idea of capping insurance rate increases, Director Wise cautioned against this approach, explaining that it could force carriers out of the market, potentially leading to a situation similar to California’s, where major insurers are no longer accepting new applicants.

Representative McGinnis also pondered the possibility of South Carolina establishing its own insurance provider, akin to FEMA at the federal level or Florida’s Citizens, a state-run insurance carrier. However, SCDOI leaders noted potential challenges, such as taxpayers having to bear the financial burden if the state-run agency can’t meet claim payments.

In navigating these complexities, officials are exploring ways to ease the burden on homeowners. This includes considering changes to how insurance policies are taxed, potentially providing temporary relief during this critical period in the insurance industry.