An insurance industry trade group is asking South Carolinalawmakers to act cautiously as they try to reform the state'scatastrophe insurance market.

The Property Casualty Insurers Association of America (PCI) saidin a prepared statement it is urging that attitude on the stateSenate Banking and Insurance Subcommittee in Charleston.

Potential reforms in insurance markets for coastal communitiesare the subject of hearings being held by the committee.

"We urge South Carolina to act cautiously and carefully examineall the available options to opening markets which will encourageand attract capital," said Donald Griffin, PCI vice president forpersonal lines.

He added, "Some of the most promising steps the state shouldexplore are included in the legislation being considered such asexpansion of the windstorm program, improvements to building coderequirements and retrofitting, and endorsement of other state andfederal initiatives that would protect and enhance the insuranceenvironment for citizens."

PCI is supporting legislation in the South Carolina House thatit said would allow for a limited expansion of the state's residualmarket, known as the South Carolina Wind and Hail UnderwritingAssociation, but would also require it to serve as a market of lastresort and charge above-market rates.

The legislation, known as HB 3820, was introduced by Rep. HarryCato, R-Greenville, chairman of the House Labor, Commerce andIndustry Committee. According to the PCI, the bill would alsoaddress catastrophic risk and stabilize the marketplace by allowingfor homeowners to establish tax-free savings accounts to help payfor windstorm deductibles and tax credits for those who retrofittheir homes to better protect them in the event of a majorstorm.

"Roughly one dollar spent to better protect a property resultsin four dollars saved following an event," Mr. Griffin said. "Theapproach outlined in this bill and several being considered at thefederal level would give homeowners themselves additionalincentives to make improvements and would save many dollars laterin disaster assistance and other government programs."

Among the cat-related legislation in South Carolina are Gov.Mark Sanford's proposals for a series of tax incentives to helppeople retrofit their homes to withstand hurricanes and developdisaster savings accounts. He has also introduced proposals toassist low-income families to purchase insurance and give taxcredits to insurers writing policies for coastal risks.

Mr. Sanford's proposals drew praise Friday from Robert P.Hartwig, president of the Insurance Information Institute.