Coastal Property at Mercy of Wind Pools

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SPECIAL REPORT: STORM OF MONEY SUBURBAN Coastal property SUPREMACIST? at mercy Summerville resident Kyle Rogers Accused drug smuggler still awaiting a rising star in radical right movement of wind Coastal trial after nearly 4 years Local & State, B1 pools vestors, Start With aRoth Slaves who BY TONY BARTELME were taken [email protected] to the United Every year, about 47,000 property owners on the coast of South Caro- lina pay millions of dollars to a special States hit the insurance organization that funnels nearly all of this money to a group of slave lottery. super-wealthy companies in Bermu- da, Switzerland and other far-$ung — Kyle Rogers locales. Welcome to the Byzantine world of the “wind pools,” where rates are set Slade: Don’t delay high on purpose and insurers spend millions to insure themselves. opening a Roth IRA Most coastal states have wind pools Money, F1 — government-chartered nonprof- its that insure high-risk homes and WSJ: Young investors buildings no private insurance company wants to cover. should start with Roth And some have become massive en- Wall Street Journal, F3 terprises. Florida’s wind pool, Citizens Property Insurance Corp., insures 1.4 million properties and collects $3 billion in premiums a year. property South Carolina’s smaller iteration is the S.C. Wind and Hail Association, which every year collects nearly $100 million in premiums from 46,000 homeowners and 1,000 commercial property owners in two zones near the water. In Charleston County alone, it insures about 10,000 properties valued at $4 billion. On average, owners shell out about $2,040 for coverage against wind and hail damage. !at doesn’t include coverage for "res and $ood- ing, which requires separate polices. Blacks in the U.S. “are the most privileged “I’m paying almost $5,000 for all my insurance now,” said George L. Wil- members of their race.” — Rogers liams, a retired veteran from the Isle of Palms whose home is in one of the wind pool zones. “Really and truly, I Arizona the !nal would like someone to explain what’s obstacle in USC’s bid going on with the money.” Some consumer advocates say wind for third straight title pools reflect a troubling trend: Pri- ? Sports, C1 FILE/TYRONE WALKER/STAFF vate insurance companies are shi%ing In 2007, Kyle Rogers strongly voiced his support of a proposed anti-illegal-immigration resolu- high-risk properties to these groups tion in the S.C. General Assembly during a public debate in North Charleston. Rogers was recently and keeping “the safest risks for them- Follow the Gamecocks named one of the radical right’s “30 to watch” by the Southern Poverty Law Center (below). selves,” a report by the Consumer Fed- For complete coverage of eration of America said this year. South Carolina’s bid for a third BY GLENN SMITH [email protected] “It is akin to solving the health in- at mercy straight College World Series surance crisis by requiring states to championship and Gamecocks yle Rogers has been described as a white suprem- cover sick or terminally ill patients, beat writer Darryl Slater’s acist and one of the rising leaders of America’s while the private sector writes cover- reports from Omaha, go to age for young and healthy consumers,” postandcourier.com. radical right, but most of his neighbors in Sum- the report said. Kmerville probably don’t even know he’s there. Others say wind pools have helped !e 35-year-old computer engineer has kept a relatively prevent real-estate meltdowns in Partly cloudy. hurricane-prone areas by giving High 91. Low 72. low pro"le in local circles since moving from Ohio to the Complete 5-day Lowcountry in 2004. Please see POOLS, Page A6 forecast, B8 But he’s been busy building a name for himself through ONLINE: For interactive racially provocative writings and as a key player in the maps and a searchable CONTACT US Council of Conservative Citizens, a national group that database of rates in Classi!ed ...... 722-6500 your county, or to read Home delivery ...... 853-POST (7678) opposes “all e#orts to mix the races of mankind.” previous stories in the series, go to General o"ces ...... 577-7111 Newsroom ...... 937-5582 Please see ROGERS, Page A5 postandcourier.com/storm-of- money. INDEX Arts & Travel ...... E1 Home & Garden .. D1 Books ...... E4 Local News ...... B1 Q&A: A look at the possible health care outcomes Celebrations ...... G4 Money ...... F1 Classi!eds ...... H1 Movies ...... E7 BY MARK SHERMAN and Inside keep looking for answers, whether or A: !at would settle the legal argu- Cooking ...... D3 Obituaries ...... B4 RICARDO ALONSO&ZALDIVAR not the A#ordable Care Act passes the ment, but not the political battle. Dear Abby ...... G5 Pets ...... D5 Associated Press COMMENTARY: Obamacare purge test of constitutionality. !e clear winners if the law is upheld won’t cure our Nanny State-itis. A15 Crossword ...... E5 Sports ...... C1 With a decision by the court expect- and allowed to take full e#ect would be Editorials ...... A14 Television ...... E8 WASHINGTON — Some people ed this week, here is a look at potential uninsured people in the United States, of wind Faith & Values..... G1 Wall St. Journal ...F2 already are anticipating the Supreme CAMPAIGN ’12: How presidential outcomes: estimated at more than 50 million. Court’s ruling on President Barack contenders will react to ruling. A4 Starting in 2014, most could get cov- Setting the record straight ...... 2A Obama’s health care law as the “deci- Q: What if the Supreme Court up- erage through a mix of private insur- sion of the century.” But the justices !e problems of high medical costs, holds the law and !nds Congress was ance and Medicaid, a safety-net pro- N are unlikely to have the last word on widespread waste, and tens of millions within its authority to require most gram. Republican-led states that have a rising star in radical right movement S America’s tangled e#orts to address of people without insurance will re- people to have health insurance or health care woes. quire Congress and the president to pay a penalty? Please see Q&A, Page A7

ONLINE: For interactive pools maps and a searchable database of rates in BY TONY BARTELME your county, or to read [email protected] previous stories in the series, go to postandcourier.com/storm-of- Every year, about 47,000 property money. owners on the coast of South Caro- lina pay millions of dollars to a special insurance organization that funnels : A look at the possiblenearly all of this health money to a group ofcare outcomes super-wealthy companies in Bermu- da, Switzerland and other far-!ung locales. Welcome to the Byzantine world of the “wind pools,” where rates are set high on purpose and insurers spend millions to insure themselves. Most coastal states have wind pools — government-chartered nonprof- its that insure high-risk homes and buildings no private insurance company wants to cover. And some have become massive en- terprises. Florida’s wind pool, Citizens Property Insurance Corp., insures 1.4 million properties and collects $3 billion in premiums a year. South Carolina’s smaller iteration is the S.C. Wind and Hail Association, which every year collects nearly $100 million in premiums from 46,000 homeowners and 1,000 commercial property owners in two zones near the water. In Charleston County alone, it insures about 10,000 properties valued at $4 billion. On average, owners shell out about $2,040 for coverage against wind and hail damage. "at doesn’t include coverage for #res and !ood- ing, which requires separate polices. “I’m paying almost $5,000 for all my insurance now,” said George L. Wil- liams, a retired veteran from the Isle of Palms whose home is in one of the wind pool zones. “Really and truly, I would like someone to explain what’s going on with the money.” Some consumer advocates say wind pools reflect a troubling trend: Pri- vate insurance companies are shi$ing high-risk properties to these groups and keeping “the safest risks for themselves,” a report by the Consumer Fed- eration of America said this year. “It is akin to solving the health insurance crisis by requiring states to cover sick or terminally ill patients, while the private sector writes coverage for young and healthy consumers,” the report said. Others say wind pools have helped prevent real-estate meltdowns in hurricane-prone areas by giving !" Coastal property at mercy of wind pools POOLS, from A1 made a direct hit on Charleston or Myrtle Beach, the group would never homeowners another option to buy have enough to cover losses, Harrison wind hazard insurance, even though said. For this reason, the wind pool it’s expensive. must go outside South Carolina to What is clear is that as private com- !nd ways to pay for a future catas- panies such as Allstate and State Farm trophe. pull out of areas near the ocean, wind And it does this by taking out insur- pools have emerged as significant ance policies of its own. players in coastal states such as South Carolina, even though, as Rick Amick, Masters of disaster chief !nancial o"cer of the S.C. Wind Insurance is about spreading risk, and Hail Association, said, “We like to and it has a long tradition. Ancient #y under the radar.” traders increased their odds of getting materials to destinations by spreading What are wind pools? cargoes among different ships and $e wind pool’s roots stretch back caravans. to a double-whammy of fear during Today, a relatively small group of the 1960s. wealthy reinsurance companies across A%er inner-city riots, insurers grew the globe do something similar for in- nervous about covering homes in ur- surance companies and groups such as ban areas. States responded by creat- the S.C. Wind and Hail Association. ing FAIR plans, short for “fair access In South Carolina, of the roughly $97 to insurance requirements,” to cover million in premiums that were col- properties that private insurance com- lected in 2011, about $85 million went panies dropped. toward reinsurance. At the same time, insurance com- The world’s 200 reinsurance companies grew anxious about their po- panies have become global masters tential losses in a hurricane strike. of disasters, taking in vast sums of The federal government responded money in Europe to help insurers in by creating the National Flood Insur- the United States pay for a devastating ance Program in 1968; states followed tornado strike in Oklahoma, or using by forming wind pools. billions of dollars from insurers in the In 1971, South Carolina lawmak- United States to help pay for losses of ers ordered insurers to set up the S.C. a tsunami in Japan. Wind and Hail Association. Only Every year, these companies collect people in specially designated zones more than $200 billion in premiums near the ocean are eligible for wind from insurance companies and wind pool coverage. pools. $ough created by state statute, the And the insurance industry is quick association is run by the insurance to say we would be in trouble without industry, including many insurers them. A%er hurricanes Rita and Ka- that are canceling policies. The as- trina in 2005, reinsurance companies sociation’s board comprises 11 insur- sent billions of dollars to private insurance company o"cials, two insurance ance companies, which in turn paid agents and four consumer representa- homeowners with claims. tives. According to the reinsurance giant The association is funded by the Swiss Re, reinsurance companies were premiums it collects from property responsible for paying 60 percent of owners. Much of the legwork with those hurricanes’ claims. customers is done by traditional in- Ten reinsurance companies control surance agents who last year received three-quarters of the market. Munich $9 million in commissions from the Re is the largest with 15 percent, and association. it is expected to make $3.1 billion in Unlike the federal #ood insurance pro!ts this year. Because such a small program, the South Carolina wind number of companies are involved, pool receives no money from tax- some are concerned about the poten- payers. In the event of a catastrophe, tial for price !xing. taxpayers wouldn’t be on the hook for A European Commission report in claims. 2007 cited this possibility and noted Its small sta& works out of an o"ce that in some European countries, re- in Columbia, and one of its main goals insurance companies may control half is to provide insurance rates that are the market or more. “In other market so high they don’t compete with tradi- sectors, such a concentration of mar- tional insurance companies like State ket share would be likely to trigger a Farm and Allstate. monopoly investigation.” “We don’t want to push companies Robert Hunter, a former insurance out of the market, but we do want to commissioner from Texas now with be a safety net,” said Smitty Harrison, the Consumer Federation of America, the longtime head of the association. said reinsurance companies in Florida “It’s a bizarre business model. We want were charging !ve times more than our competition to take our business.” what their own actuaries said they Although the wind pool collects needed. $97 million a year from South Caro- In response, Florida has been build- lina property owners, it insures more ing a hurricane catastrophe fund, than $17 billion in property. It has no now at $15 billion, a move that helped reserve fund to speak of. homeowners save $20 billion on their $at presents the group with a major policies in recent years. But in South problem: If a catastrophic hurricane Carolina and many other states, wind !e Post and Courier postandcourier.com Sunday, June 24, 2012: A7

! Property Health care Q&A SUNDAY, June 24, 2012 Q&A, from A1 invalidates the parts of the law that require insurance at mercy resisted creating health insur- companies to cover people re- ance markets under the law, in- gardless of medical problems cluding South Carolina, would and that limit what they can of pools face a scramble to comply, but charge older people? PROPERTY, from A6 the U.S. would get closer to A: Many fewer people would 2007 cited this possibility and noted other economically advanced get covered, but the health in- that in some European countries, re- pools are at the mercy of whatever customers in wind pool zones countries that guarantee medi- surance industry would avoid a insurance companies may control half the reinsurance industry!e Postdecides and Courier to who have seen their rates sky- postandcourier.com cal care Sunday, for their June citizens. 24, 2012: A7 dire #nancial hit. the market or more. “In other market charge, he said. rocket — people like Susan and Republicans would keep try- Insurers could continue sectors, such a concentration of mar- John Watkins. ing to block the law. !ey will screening out people with a ket share would be likely to trigger a Selling South Carolina try to elect presidential candi- history of medical problems, Every year, Harrison and other sta! Feelings of betrayal date Mitt Romney, backed by diabetes patients or cancer sur- Robert Hunter, a former insurance members with the S.C.Property Wind and !e couple has lived o" Camp Health carea GOPQ&A House and Senate, and vivors, for example. Road on James Island for 37 Q&A, from A1 invalidatesrepeal the law, the although parts of theirthe !at would prevent a sudden commissioner from Texas now with Hail Association travel to reinsur- BRAD NETTLES/STAFF years. In 1989 they stayed in lawchances that ofrequire repeal wouldinsurance seem jump in premiums. But it would the Consumer Federation of America, ance meetings in London, Bermuda George L. Williams’ Isle of Palms home is in the !rst wind pool zone and has coverage said reinsurance companies in Florida and other reinsurance athot spots. mercy "e their house during Hurricane resisted creating health insur- companiesto be diminished to cover by people the court’s re- leave consumers with no assur- Hugo and lost only 12 pine trees with the S.C. Wind and Hail Association. “I pay almost $5,000 for all of my insurance now. endorsement. ance that they can get health ve times more than wind pool’s job, Harrison said, is to sell ance markets under the law, in- gardless of medical problems and a corner of their roof. !ey Really and truly, I would like someone to explain what’s goingcluding on with South the Carolina,money.” would and that limit what they can insurance when they need it, what their own actuaries said they these companies on the ofargument pools that had insurance with State Farm Q: On the other hand, what which is a major problem that South Carolina’s coastal homeowners face a scramble to comply, but charge older people? PROPERTY, from A6 then, and switched to S.C. Farm the! U.S.at’s because would getinsurance closer into- ifA: the Many court fewer strikes people down would the the law was intended to #x. In response, Florida has been build- are worth covering and that the state’s Bureau when they re#nanced. State lawmakers who handle dustry computer models are entire law? ing a hurricane catastrophe fund, wind pool operates in a responsible other economically advanced get covered, but the health in- customers in wind pool zones “In 2007, all of a sudden they insurance legislation countriespredicting that higher guarantee losses. medi- suranceA: Many industry people would would avoid ap a - Q: What happens if the court now at $15 billion, a move that helped way. who have seen their rates sky- dropped our wind and hail calThe care models, for their dubbed citizens. “black direplaud, #nancial polls suggest. hit. throws out only the expansion homeowners save $20 billion on their Harrison said their rocketsales —pitches people like Susan and coverage,” Susan Watkins said. boxes”Republicans because would of their keep secret try- InsurersTaking down could the continuelaw would of the Medicaid program? policies in recent years. But in South have worked well over theJohn years, Watkins. even “!ey said it was because of in- Senate Banking and Insurance Committee ingalgorithms, to block thehave law. their ! eycritics, will screeningkill a costly out federal people entitlement with a A: !at severely would limit Carolina and many other states, wind though the reinsurance industry creased hurricanes and some- tryincluding to elect somepresidential who say candi they- historybefore itof has medical a chance problems, to take the law’s impact, because pools are at the mercy of whatever tends to look at state windFeelings pools of as betrayal lems. A catastrophething called fund reinsurance.” could be Like David L. Thomas, Chairman Luke A. Rankin dateoverstate Mitt theRomney, risks and backed make by it diabetesroot and patients develop or cancer a clamor sur-- roughly half of the more than the reinsurance industry decides to bad overall risks. !e couple has livedwiped o" Camp out quickly others in who a major have been storm, dropped, Nikki G. Setzler Thomas C. Alexander aeasier GOP for House insurers and andSenate, reinsur and- vivors,ing constituency, for example. but that still 30 million people expected to Of the 99 reinsuranceRoad entities on James the Islandand when for 37 it comesshe felt betrayed.to assessments, John E. Courson Ronnie W. Cromer repealers to chargethe law, higher although rates. their would!at would leave prevent the problems a sudden of gain insurance under the law state works with, about years.80 have In decid 1989- they“you’re stayed basically in “It’s asking like they’re people really who into risk John W. Matthews Jr. Clementa C.BRAD Pinckney NETTLES/STAFF chancesKaren ofClark, repeal the would architect seem of jumphigh incosts, premiums. waste and But itmillions would would get it through the expan- ed to cover potential windtheir pool house losses. during have Hurricane just had aavoidanceGeorge major loss L. instead Williams’ to pay of more risk Isle insur of Palms- homeGlenn is G. in Reese the !rst wind pool zoneGerald and Malloy has coverage tothe be # diminishedrst catastrophe by the computer court’s leaveuninsured. consumers Some with Republicans no assur- sion of Medicaid, the federal- Every year, Harrison and other sta! "at means the wind poolHugo e! andectively lost only money,” 12 pine trees Marlett ance.”with said. the She S.C. called Wind the and Depart Hail -Association.Robert “IW. pay Hayes almost Jr. $5,000 forWilliam all of myH. O’Dell insurance now. endorsement.model, said she found new ancein Congress that they already can get are healthtalking state health insurance program members with the S.C. Wind and spreads the risk of a devastatingand a corner hur of- their roof. !ey mentReally of and Insurance. truly, I would“!ey were like someoneDarrell to Jackson explain what’s going onRobert with Ford the money.” models have overestimated insuranceabout passing when anew they the need more it, for low-income people. Hail Association travel to reinsur- ricane hit to 80 companies.had insurance Average with takes State care Farm of thenot problem very nice,” of covering she said. “All Larry A. Martin Tom Davis lossesQ: On by the as much other as hand, $53 billion. what whichpopular is piecesa major of problemthe health that law. But a potentially sizable num- then, and switched to S.C. Farm they told us was that we would !at’s because insurance in- if Athe Post court and strikesCourier downreport thethis the law was intended to #x. ber of those low-income people ance meetings in London, Bermuda premiums have risen only 14 percent high-risk properties, he said, adding House Labor, Commerce and Industry Committee e since 2007. Bureau when theythat re#nanced. Harrisonhave andState to his get team insurancelawmakers have froman the who handle dustry computer models are entiremonth law? found that South Caro- Q: What happens if the court still might be eligible for gov- “In 2007, all of a sudden they wind pool.” predicting higher losses. linaA: regulatorsMany people have littlewould knowl ap-- strikesQ: What down happens the ifindividual the court ernment-subsidized private in- wind pool’s job, Harrison said, is to sell David Marlett, chairman of Appala- excellent reputationHerinsurance lastin the bill industry. from legislation the S.C. William E. Sandifer III, Kristopher R. Crawford edge about the inner-workings of insurance requirement, but surance under other provisions. these companies on the argument that chian State University’s Departmentdropped our of wind and hail The models, dubbed “black plaud, polls suggest. throws out only the expansion coverage,” Susan Watkins said. Wind and Hail Association was chairman boxes”P. Michael because Forrester of their secret theseTaking models down and the whether law would they ofleaves the Medicaid the rest ofprogram? the A!ord- Private coverage is more expen- South Carolina’s coastal homeowners Finance, Banking and Insurance,“!ey said it has was becausethat time of in period,- $3,200, Senatethe andSouth Bankingthat Carolina didn’t and include Insurance Grady Committee A. Brown, 1st vice algorithms,Michael W. have Gambrell their critics, killproperly a costly assess federal risk in entitlement South Car- ableA: ! Careat severely Act in place?would limit sive to subsidize than Medicaid. are worth covering and that the state’s studied wind pools throughoutcreased hurricanes the wind and poolsome has- coverage been one for of $theoods best, and if other chairman includingJackie E. Hayessome who say they beforeolina. Otherit has astates chance have to found take theA: law’sIndividuals impact, would because have no States suing to overturn the wind pool operates in a responsible Southeast since 1998. thing called reinsurance.”not the best, Like managedhazards.David residual L. Thomas, market Chairman LukeShannon A. Rankin S. Erickson, 2nd overstatePhillip D. the Lowe risks and make it rootmajor and $aws develop in models a whenclamor they- roughlyobligation half to of carry the more insurance, than federal law argue that the Med- Other states have set othersup special who haveca- beenprogram dropped, in the “Itcountry.”Nikki got to G. the Setzler point where it was Thomasvice chairman C. Alexander easierDavid for J. insurers Mack III and reinsur- inglooked constituency, at them. but that still 30but million insurers people would expected remain to icaid expansion comes with so Harrison said their sales pitches tastrophe funds or systemsshe felt to betrayed. assess ridiculous,”John E. sheCourson said. She and her RonnieCarl L. W. Anderson Cromer ersDennis to charge C. Moss higher rates. wouldMeanwhile, leave the as South problems Carolina of gainbound insurance by the law under to accept the law ap - many strings attached that it have worked well over the years, even property owners and insurers“It’s like a they’re#er a really into risk husbandJohn W.recently Matthews found Jr. a pri- ClementaJimmy C. C. Bales Pinckney KarenSteve A.Clark, Parker the architect of highheads costs, into thewaste heart and of millions another wouldplicants get regardless it through theof medical expan- amounts to an unconstitutional though the reinsurance industry storm. Both approachesavoidance have prob instead- ofPlease risk insur see - vateGlenn insurance G. Reese company will- GeraldEric M. Malloy Bedingfield theLewis #rst E.catastrophe Pinson computer uninsured.hurricane season, Some Republicanshomeowners sioncondition of Medicaid, and limit the what federal- they power grab by Washington. !e tends to look at state wind pools as lems. A catastrophe fundance.” could She calledbe the Depart- ing Robertto write W. a Hayespolicy Jr.for about WilliamWilliam H. K. O’Dell Bowers model,McLain said R. Toole she found new inin Congress coastal areas already remain are talking in pre- statecharge health their insurance oldest and program sickest administration said the federal Joan B. Brady wiped out quickly in a mentmajor of storm, Insurance. “!ey were $2,800.Darrell But Jackson the high rates are Robert Ford models have overestimated aboutcarious passing positions. anew the more forcustomers. low-income people. government will pay virtually all Larry A. Martin Tom Davis Of the 99 reinsurance entities the and when it comes to notassessments, very nice,” she said. “All still tough to swallow for retir- losses by as much as $53 billion. popular!eir ratespieces are of the subject health to law. re- ButStudies a potentially suggest sizable that premi num-- the cost, and that the expansion they told us was that we would ees. “It’s just killing us, and be- main a market of last resort,” knowA Post the and e" Courierects immediately,” report this insurance giants oceans away; berums of inthose the low-income individual people health is no different from ones that state works with, about 80 have decid- “you’re basically asking people who ing Housein the wind Labor, pool Commerce zone puts andAmick Industry said. AtCommittee the same time, he said. state lawmakers are doing little insurance market would jump states have accepted in the past. ed to cover potential wind pool losses. have just had a major losshave to payto get more insurance from the month found that South Caro- Q: What happens if the court still might be eligible for gov- wind pool.” a stigma on us when we have to they’re trying not to create too linaOne regulators sign that have the little market knowl has- strikesto support down efforts the individual to monitor ernment-subsidizedby 10 percent to 30 percent.private in- ectively money,” Marlett said. Her last bill from the S.C. sell ourWilliam property,” E. Sandifer she said. III, heavyKristopher a burden R. for Crawford homeowners. edgestabilized about the is thatinner-workings the number of insurancethe fairness requirement, of rates; and if theirbut suranceExperts under debate other whether provisions. that Q: What happens if the court spreads the risk of a devastating hur- Reinsurance may be expensive,Wind and but Hail it Association was chairman TheyP. Michael acknowledge Forrester that set- theseof policies models has and stayed whether around they leavesinsurance the companyrest of the drops A! ordthem- Privatewould coveragetrigger theis more collapse expen of- decides that the constitutional ricane hit to 80 companies. Average takes care of the problem$3,200, of covering and that didn’t include ‘MarketGrady A.of Brown, last resort’ 1st vice tingMichael rates is W. a Gambrellbit of an art form. properly47,000 for assess several risk inyears. South Car- ablethey’re Care le &Act with in place?what o%cials sivethe tomarket subsidize for individualsthan Medicaid. and challenge is premature? premiums have risen only 14 percent high-risk properties, hecoverage said, adding for $ oods and other Inchairman a sense, though, their ex- If Jackiethe wind E. Hayes pool gets a huge in- olina. Other states have found fromA: Individuals the wind wouldpool acknowl have no- smallStates businesses, suing to overturn or just make the A: The wild card, and least that Harrison and his hazards.team have an perienceShannon is a wind S. Erickson, pool success 2nd fluxPhillip of homeownersD. Lowe seeking majorBlack $aws boxes in models and when rates they obligationedge is an tounusual carry insurance,sales pitch: federalcoverage law even argue harder that the to Meda"ord- conclusive outcome in the case, David Marlett, chairman of Appala- excellent reputation in the“It industry. got to the point where it was story.vice chairman policies,David J. that Mack usually III means the lookedThe problemat them. homeowners but“We’re insurers not only would expensive,” remain icaidthan expansion it is now. comes In any with event, so probably also is the most un- chian State University’s Department of “I’m comfortable sayingridiculous,” that over she said. She and her StaCarl" members L. Anderson with the S.C. group’sDennis rates C. Moss are too low, said faceMeanwhile, is that rates as South are Carolinalikely to boundAmick by said. the “Butlaw to you accept get apless- manythere stringswould attachedbe risks thatto the it likely, based on what justices Finance, Banking and Insurance, has that time period, the Southhusband Carolina recently found a pri- WindJimmy and C. Hail Bales Association DavidSteve Leadbitter, A. Parker chief operat- headscontinue into going the heart up because of another re- plicantscoverage regardless for your money.” of medical amountshealth care to an system. unconstitutional Fewer peo - said during the arguments. No studied wind pools throughout the wind pool has been onevate of the insurance best, if company will- wantEric private M. Bedingfield insurance com- ingLewis o%cer. E. Pinson If rates are too high, hurricaneinsurance season,companies homeowners are reas- condition and limit what they powerple would grab signby Washington. up for coverage. !e justice seemed inclined to take not the best, managed residualing to write market a policy for about paniesWilliam to take K. Bowers business away homeownersMcLain R. Toole complain. insessing coastal their areas vulnerabilities remain in pre to- chargeReach their Tony oldest Bartelme and sickest at administration said the federal this path, which involves the Other states have set up special ca- program in the country.”$2,800. But the high rates are fromJoan them. B. Brady “No computer can #gure this cariousdisasters, positions. Leadbitter and other customers.937-5554 and @tbartelme on governmentQ: What ifwill the pay court virtually strikes all court’s consideration of a tech- tastrophe funds or systems to assess That’s small comfort,still however, tough to to swallow for retir- “We are truly trying to re- out, but if you screw it up, you experts!eir ratessay. are subject to re- Twitter.Studies suggest that premi- thedown cost, the and mandate that the expansion and also nical issue. er a ees. “It’s just killing us, and be- main a market of last resort,” know the e"ects immediately,” insurance giants oceans away; ums in the individual health is no different from ones that ing in the wind pool zone puts Amick said. At the same time, he said. state lawmakers are doing little insurance market would jump states have accepted in the past. a stigma on us when we have to they’re trying not to create too One sign that the market has to support efforts to monitor by 10 percent to 30 percent. sell our property,” she said. heavy a burden for homeowners. stabilized is that the number the fairness of rates; and if their Experts debate whether that Q: What happens if the court They acknowledge that set- of policies has stayed around insurance company drops them would trigger the collapse of decides that the constitutional ‘Market of last resort’ ting rates is a bit of an art form. 47,000 for several years. they’re le& with what o%cials the market for individuals and challenge is premature? In a sense, though, their ex- If the wind pool gets a huge in- from the wind pool acknowl- small businesses, or just make A: The wild card, and least perience is a wind pool success flux of homeowners seeking Black boxes and rates edge is an unusual sales pitch: coverage even harder to a"ord conclusive outcome in the case, story. policies, that usually means the The problem homeowners “We’re not only expensive,” than it is now. In any event, probably also is the most un- Sta" members with the S.C. group’s rates are too low, said face is that rates are likely to Amick said. “But you get less there would be risks to the likely, based on what justices Wind and Hail Association David Leadbitter, chief operat- continue going up because re- coverage for your money.” health care system. Fewer peo- said during the arguments. No want private insurance com- ing o%cer. If rates are too high, insurance companies are reas- ple would sign up for coverage. justice seemed inclined to take panies to take business away homeowners complain. sessing their vulnerabilities to Reach Tony Bartelme at this path, which involves the from them. “No computer can #gure this disasters, Leadbitter and other 937-5554 and @tbartelme on Q: What if the court strikes court’s consideration of a tech- “We are truly trying to re- out, but if you screw it up, you experts say. Twitter. down the mandate and also nical issue.

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CYAN-AOOO MAGENTA-OAOO YELLOW-OOAO BLACK 012908 !!" SUNDAY, June 24, 2012

had insurance with State Farm main a market of last resort,” know the e!ects immediately,”then, and switched to S.C. Farm nanced. State lawmakers who handle Amick said. At the same time, he said. “In 2007, all of a sudden they they’re trying not to create too One sign that the droppedmarket hasour wind and hail insurance legislation heavy a burden for homeowners. stabilized is that thecoverage,” number Susan Watkins said. They acknowledge that set- of policies has stayed around - Senate Banking and Insurance Committee ting rates is a bit of an art form. 47,000 for several years. - thing called reinsurance.” Like David L. Thomas, Chairman Luke A. Rankin If the wind pool gets a huge in- others who have been dropped, Nikki G. Setzler Thomas C. Alexander flux of homeowners seeking Black boxes and rates John E. Courson Ronnie W. Cromer policies, that usually means the The problem homeowners“It’s like they’re really into risk John W. Matthews Jr. Clementa C. Pinckney group’s rates are too low, said face is that rates areavoidance likely instead to of risk insur- Glenn G. Reese Gerald Malloy David Leadbitter, chief operat- continue going up ance.”because She re called- the Depart- Robert W. Hayes Jr. William H. O’Dell ey were Darrell Jackson Robert Ford cer. If rates are too high, insurance companiesnot are very reas nice,”- she said. “All Larry A. Martin Tom Davis sessing their vulnerabilitiesthey told us to was that we would gure this disasters, Leadbitterhave and to otherget insurance from the House Labor, Commerce and Industry Committee out, but if you screw it up, you experts say. Her last bill from the S.C. William E. Sandifer III, Kristopher R. Crawford !at’s because insuranceWind and Hailin- Association was chairman P. Michael Forrester dustry computer $3,200,models and are that didn’t include Grady A. Brown, 1st vice Michael W. Gambrell oods and other chairman Jackie E. Hayes predicting higher losses. Shannon S. Erickson, 2nd Phillip D. Lowe The models, dubbed“It got “black to the point where it was vice chairman David J. Mack III boxes” because of ridiculous,”their secret she said. She and her Carl L. Anderson Dennis C. Moss algorithms, have theirhusband critics, recently found a pri- Jimmy C. Bales Steve A. Parker including some whovate sayinsurance they company will- Eric M. Bedingfield Lewis E. Pinson overstate the risks ingand to make write ait policy for about William K. Bowers McLain R. Toole $2,800. But the high rates are Joan B. Brady easier for insurers andstill toughreinsur to swallow- for retir- ers to charge higher rates. Karen Clark, the architect of the "rst catastrophe computer model, said she Propertyfound new Health care Q&A models have overestimated losses by as much asat $53 mercy billion. A Post and Courier report this month found that ofSouth pools Caro- lina regulators have little knowl- edge about the inner-workingscustomers in wind of pool zones these models and whetherwho have seen they their rates sky- properly assess risk rocketin South — people Car like- Susan and olina. Other states have found major #aws in models when they Camp looked at them. Road on James Island for 37 years. In 1989 they stayed in BRAD NETTLES/STAFF Meanwhile, as Souththeir house Carolina during Hurricane George L. Williams’ Isle of Palms home is in the !rst wind pool zone and has coverage heads into the heartHugo of and another lost only 12 pine trees with the S.C. Wind and Hail Association. “I pay almost $5,000 for all of my insurance now. ey Really and truly, I would like someone to explain what’s going on with the money.” hurricane season, homeownershad insurance with State Farm in coastal areas remainthen, and in switched pre- to S.C. Farm !at’s because insurance in- carious positions. Number of insurance policies !eir rates are subjectCoastal to re- property at (BY COUNTY) ects immediately,” insurance giants oceans away; Horry County ...... 21,353 mercy of wind pools Georgetown County ...... 3,509 state lawmakers are doing little Charleston County ...... 9,914 made a direct hit on Charleston or Colleton County ...... 7 Myrtle Beach, the group would never Beaufort County ...... 10,378 One sign that the market has to support efforts to monitor have enough to cover losses, Harrison said. For this reason, the wind pool FILE PHOTOGRAPHS/STAFF stabilized is that the number the fairness of rates; and if their must go outside South Carolina to of policies has stayed around insurance company drops them nd ways to pay for a future catas- And it does this by taking out insur- NORTH they’re le$ with what o%cials 9 CAROLINA 17 Insurance is about spreading risk, from the wind pool acknowl- and it has a long tradition. Ancient traders increased their odds of getting Black boxes and rates edge is an unusual sales pitch: materials to destinations by spreading cargoes among different ships and 31 The problem homeowners “We’re not only expensive,” Intracoastal Waterway Conway 17 Today, a relatively small group of Bypass wealthy reinsurance companies across North Myrtle Beach face is that rates are likely to Amick said. “But you get less the globe do something similar for insurance companies and groups such as Atlantic Beach continue going up because re- coverage for your money.” the S.C. Wind and Hail Association. In South Carolina, of the roughly $97 Briarcli!e Acres million in premiums that were col- insurance companies are reas- lected in 2011, about $85 million went 31 The world’s 200 reinsurance com- 17 sessing their vulnerabilities to Reach Tony Bartelme at 17 HORRY COUNTY panies have become global masters Bypass of disasters, taking in vast sums of 501 disasters, Leadbitter and other 937-5554 and @tbartelme on money in Europe to help insurers in the United States pay for a devastating Twitter. tornado strike in Oklahoma, or using billions of dollars from insurers in the Myrtle Beach United States to help pay for losses of

Every year, these companies collect more than $200 billion in premiums from insurance companies and wind

And the insurance industry is quick to say we would be in trouble without er hurricanes Rita and Ka- BEAUFORT COUNTY GEORGETOWN COUNTY trina in 2005, reinsurance companies Beaufort SouthSouth Carolina’s Carolina insurance ‘Wind ‘Wind Pool’ Pool’ Zone 1 Zone 2sent billions of dollars to private insur- 21 SouthProperty Carolina’s owners in two zones along insurance the coast can get insurance ‘Wind from the S.C. Pool’ Wind and Hail For a more detailed versionance of this companies, map, which in turn paid Association, though the cost likely will be much higher than with a regular insurance company. go to: www.scwind.com/Expansion.asp Association, though the cost likely will be much higher than with a regular insurance company. 701 According to the reinsurance giant Parris CHARLESTON AREA Swiss45 Re, reinsurance companies were Island Pritchards Andrews McClellanvilleresponsible for paying 60 percent of Island 162 17 174 17 Ten reinsurance companies control Blu!ton 278 Georgetown 526 17A 41 Hilton Charleston three-quarters of the market. Munich Wadmalaw Head Winyah Bay Island 700 Mt. Pleasant Bull’s Bay Re is the largest with 15 percent, and Island it is expected to make $3.1 billion in Edisto Johns Island ts this year. Because such a small Island James 171 Island number of companies are involved, Isle of Palms some are concerned about the poten- GEORGIA Seabrook Kiawah A European Commission report in Folly Beach 2007 cited this possibility and noted Number of