“In South Carolina, Insurance is Becoming Assurance”

September 2nd, 2008: Having spent 3 terms in the state House of Representatives, a term in the Senate, and over 20 years in the world of insurance, Scott Richardson, is well qualified for the appointment our Governor made in 2007 as the Director of the State Department of Insurance.

Scott began his talk by noting that about 80% of all citizens think the same way on most issues. The recent hurricane watches brings potential damage and insurance claims to our attention. He believes his role is to keep “insurance” issues off the front page, but also be a facilitator of good insurance programs for the good of the citizenry. Right now, the Coastal Insurance Market is generally good and South Carolina has successfully placed insurance in a market driven position. It is important that the state set an environment in which the insurance industry is willing to work and invest. He notes auto insurance is currently in a very good position in our state. Over 100 industry leaders in insurance are selling in the state giving us a real competitive market.

Scott credits the legislature for the current market-driven rating plan. He notes that many companies will “cannibalize” each others ideas; we do not need to tear into them; they will compete furiously on their own.

The commercial insurance market [condos, hotels, etc.] is doing very well, with premium costs having fallen 60% in the past several years. Family housing markets are much slower to react to change. After Katrina, insurance costs rose severely. In Florida alone the big companies of Allstate and State Farm saw 45 years of profits disappear in 8 hours when the big storms hit that state. Here the premium for a $250,000 house in Greenville is about $650 annually, but in places like Hilton Head or Sullivan’s Island it can be over $4500. These variations are of course due to the potential for major loss in a hurricane. Additionally, workman’s compensation rates have been high but are down some. Few cases actually go to trial, but the “multi-million dollar” cases can drive premiums out of sight. South Carolina pays 1.8% of AMA guidelines in insurance settlements as compared with 1.3%, the country average.

Long term care is a huge problem and is being worked on. The premiums initially charged in recent years were dramatically under priced. People are living longer and medical costs are rising so it is hard to afford such insurance today. Health care is a major national concern, but the figure that 43,000,000 people are without health care is misleading. The actual figure is about 20,000,000 people being without insurance, still a huge amount. But even so, most of those people do get basic care from hospitals and public assistance, but the nation needs to deal with this issue. It is impossible for the states and the Federal government to afford to provide coverage for everyone at the “Cadillac” level of coverage, but basic coverage is feasible. The legislative process often does not come up with good solutions, but they must continue to vote and try to solve the problems.

Life insurance is a partnership between the person who pays for it and the beneficiary who will receive it. This is a special relationship. Caution should be observed to avoid having insurance companies sell large bundles of such policies to companies who have no relationship with the beneficiary as representation will diminish. In the future, proper regulation is the key to watching out for the public be it life insurance or credit card debt.

Finally, with the potential huge storms on the horizon, home owners must understand that damage caused when wind drives rain up under the eves of the roof and into the house, that IS NOT FLOOD DAMAGE. But he strongly urged that everyone who lives east of I-95 should have flood insurance. If a 15 foot storm surge along with 100 MPH winds comes into the Charleston harbor, a huge portion of the city will disappear.

Submitted by Fred Sales, Club Historian