I voted "present" on the vote to confirm Ray Farmer's nomination by Gov. Nikki Haley to serve as the state's insurance commissioner.
I did not vote against his nomination because the governor is entitled, in my view, to a considerable degree of deference from the Senate in considering her cabinet nominees and also because I am convinced he is a person of good character and knowledgeable about the insurance industry.
But neither did I vote for his nomination, in material part because when asked by The (Charleston) Post and Courier whether home insurance rates on the coast were too high, he replied: "We haven't had an outcry. Pick any kind of product. As a consumer, I'm going to say that I'm paying too much for a product. But the question is whether I am getting value for what I'm paying, and I think the answer is 'yes.'"
That answer flies in the face of empirical data compiled by numerous independent and nonpartisan industry groups. Beaufort County in particular, and the Lowcountry of South Carolina in general, is a low hurricane risk relative to other areas, such as the Outer Banks in North Carolina or Gulf Port, Miss. Yet the wind-insurance premiums paid by homeowners in the former areas are comparable to, and in some cases more than, the premiums paid by those in the latter.
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During the confirmation hearings, Mr. Farmer recanted his earlier statement to the Post and Courier, agreed that wind-insurance premiums being charged by insurance companies for buildings along the coast might not be commensurate with the risk being assumed by the companies providing such coverage and pledged to consider reforms that increased competition among insurance providers and that facilitated consumers in shopping for insurance.
This market-based approach was the one taken -- rightly, in my opinion -- by the General Assembly when it passed the 2007 Omnibus Coastal Property Insurance Reform Act. That was unlike other states, such as Florida, that took a statist approach to reform and had their insurance commissioners become interventionists in the marketplace. That resulted in an exodus of private insurance companies. Our legislature wisely embraced reforms to increase supply and empower consumers.
I was greatly encouraged by Mr. Farmer's concurrence during the confirmation hearings that the remedy for the current market failure is not to abandon market-based solutions in favor of a more activist and interventionist insurance commissioner, but rather to build upon previous free-market reforms in a way that results in the better-functioning market.
I trust him to follow through on his commitment to those reforms. And again, I am convinced he is a person of good character and knowledgeable about the insurance industry. But voting "present" on his nomination, I think, was the best way to underscore my concern over the failure of the wind-insurance market to yield an equilibrium price and to memorialize the nominee's commitment to appropriate free-market reforms.