During the past two years, The coastal insurance market has begun to grow as more companies are writing policies while prices on some coverage has fallen. This was revealed recently by insurance experts to a group of homebuilders and real estate professionals meeting on Hilton Head Island.
The South Carolina State Insurance Commissioner, Scott Richardson, who is a former state senator from Hilton Head Island, announced that 12 new insurance companies have begun business in the state since 2007, when he took over as commissioner. He said that there are yet three more who are planning to enter in the next 90 days.
During that time, insurance prices for condominium buildings have dropped by as much as 50 to 60 percent along the coast.
But if a storm like Tropical Storm Gustav were to appear this year, that trend could come to a crashing halt.
Richardson says that ratings as to cost are linked to the state’s experience and an increase in named storms can have its affect.
He explained that what this means that a storm of significance hitting anywhere would bring higher rates for Hilton Head in the form of increases in the cost of reinsurance especially, or insurance for insurance companies.
If for example, the tropical storm Gustav were to grow and cost Louisiana another $40 billion, it would affect condo premiums, Richardson said.
But aside from Gustav or the more recent Hanna, which formed in the Atlantic on Thursday, storming ashore, things are improving for coastal homeowners, although policy costs are unlikely to return to pre-Katrina levels.
One factor behind this is that during the past ten years, insurance companies have been modernizing their capabilities so that they now know exactly what and where they are insuring.
In the 1990s, Professor Peter Sparks of Clemson University, worked with an insurance company that thought it was greatly overexposed in a single Miami zip code.
It turned out that zip code was a group of post office boxes. Sparks uses this to underscore that in the past insurance companies didn't even know what they were insuring.
He said that this is definitely a thing of the past.
Sparks made available some pragmatic advice when asked how to hurricane-proof a home.
He said the only way to reduce risk is to move inland, causing a laugh from the crowd at the Country Club of Hilton Head.
