The impact that hurricane risk has on our economy is one that spans real estate, tourism and retirement demand in Beaufort County. However, we live in a relatively safe coastal environment than other areas of the country. There are many theories as to why the South Carolina Lowcountry does not experience as many hurricanes as other coastal communities. Some say it's the concave shape of the coastline, some say it's the fact that storms tend to track east of here, following the Gulf Stream. It's been hypothesized that high pressure systems typically travel from the Northwest and push any approaching hurricanes further out to sea.
But the fact remains that history has proven that the local area is less vulnerable for major storms. According to the National Weather Service, in the last 100 years only two major hurricanes have hit South Carolina. Compare that with 19 strikes in Texas, 20 in Louisiana and 37 major hurricane strikes in Florida.
So we should be paying much less for homeowner property insurance than those other areas right? Wrong. And there are Lowcountry residents that are doing something about it.
Darryl Ferguson is on a mission. The effort being put forth by the retired Beaufort resident and his supporters is the right thing to do for Lowcountry property values. Ferguson has organized an effort to study the hurricane risk of our coastline and the relation of that risk to the insurance premiums homeowners pay on their properties.
What he discovered is that Beaufort County has the sixth highest rates in the nation for properties valued at $500,000 or more. For example, an annual premium of homeowners insurance for a $500,000 home in Gulf Port, Miss., was recently quoted at $488. Gulf Port has experienced 17 hurricane strikes since 1851 and is projected to have another strike in nine to 20 years.
Compare that to an annual premium of $1,400 for the same type property in Beaufort County. We have had eight hurricanes since 1851 and our area is projected to have another strike in 79 years. How could this be? Isn't South Carolina supposed to regulate insurance premiums?
There is a 2004 state law that allows for a nearly "no questions asked" annual insurance rate increases of up to 7 percent a year. Ferguson's first objective is to repeal that law in Columbia. His second objective is to raise the status of the currently vacant position of the head of the state's division of insurance so that this individual will be able to analyze and challenge the complex models insurance companies use to justify their increases.
The result of reforming our homeowner insurance situation will save Lowcountry residents money, allow more people to affordably purchase and maintain property in Beaufort County and will positively affect property values.
This article is the third in a five-part series that addresses actions to stimulate Lowcountry real estate demand and positively affect property values. Robert Stenhammer has been a resort executive for more than 15 years. He is the president of Hilton Head Accommodations.