More private insurers are selling wind coverage to coastal property owners in Beaufort County, leading to a decline in the number of homeowners in the state wind pool.
The increase in private insurers could mean lower rates for customers, insurance agents said Tuesday.
"There's a big difference between having to go to the wind pool and having five companies willing to take your business," said Russ Dubisky, director of the S.C. Insurance News Service, which represents insurance companies that write policies in the state.
"As a customer, I get to figure out what the right price point is for me."
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In the past three years, nearly 25 percent of property owners in Beaufort County have left the wind pool, a state-chartered insurer of last resort for homeowners and business owners who can't get coverage in the private insurance market. The service is offered for coastal properties, including those on Hilton Head, St. Helena and Lady's islands.
About 10,000 Beaufort County residents were insured by the wind pool in 2011, according to Smitty Harrison, executive director of the S.C. Wind and Hail Underwriting Association. Now that number hovers around 7,600, he said.
Much of the shift stems from private carriers entering the coastal market. As many as 25 companies have started offering wind coverage in the past few years, Harrison said.
Some prefer $300,000 homes near golf communities, while others -- such as Lloyd's of London -- want "the big homes, the big exposure and the big premiums," he said.
Other national insurers like State Farm have started including wind insurance in some of their homeowner's policies, he said.
Companies differ in their reasons for expanding.
Ray Craver, owner of Seacoast Insurance on Hilton Head, said insurers that previously thought wind coverage along the coast was too risky started selling more policies in the interior of the state to spread out their exposure.
"I don't think they thought they could make a profit with wind and hail because of the proximity with potential to disaster (such as a hurricane)," he said. "But once they understood there was a way to make a profit, it helped."
Jay Taylor, a partner at Kinghorn Insurance of Beaufort, said many firms realized the area is seldom hit by hurricanes compared to other places along the Southeastern coast.
"The lack of catastrophic hurricane activity, in the Lowcountry specifically, has led to a flood of private insurers in the market," he said.
Beaufort County residents and state legislators have argued that the area's insurance rates are disproportionately high compared to other places with more frequent hurricanes.
State Sen. Tom Davis, R-Beaufort, worked this spring to pass a bill that, in part, calls for the state insurance director to develop a model on which rates are based, to better reflect South Carolina's hurricane risk.
Another way to lower those rates is to increase competition, insurance experts argue.
The expanded private market will eventually do that, they say.
"It makes us able to offer a product that is more inclusive and more competitively priced," said Dubisky.
Follow reporter Dan Burley on Twitter at twitter.com/IPBG_Dan.