South Carolina Republican Gov. Mark Sanford's announcement ofhis administration's approach to solving the insurance shortage forcoastal properties has drawn support from an insurers' tradegroup.

Mr. Sanford said he was taking a market-oriented approach and itis important to "avoid knee-jerk reactions like what we have seenin Florida and problems that come with that."

Florida has offered primary insurers below-cost reinsurance andmandated that they reduce rates to reflect this. Insurers say ifthere is a major catastrophe, taxpayers will be stuck because theprogram is insufficiently funded.

Mr. Sanford said that Insurance Commissioner Scott Richardsonhas been in talks with an insurer about writing more coastalcoverage in the state.

In reaction, Liz Reynolds, Southeast state affairs manager forthe National Association of Mutual Insurance Companies, said thestate is on the "right track with a carefully considered,multifaceted approach to their coastal concerns."

In addition, Columbia, S.C.-based regional insurer Companionannounced plans to write more coverage in the state.

Meanwhile, Allstate earlier this month announced it would offercoverage to about 2,300 of the 12,000 policyholders in the state ithas targeted for nonrenewal. The company said the expansion ofresidual market coverage played a part in the decision.

Ms. Reynolds said the governor's approach contrasts withFlorida, where the state's expansion of the Florida HurricaneCatastrophe Fund has led to requirements for rate reductions alongwith measures that the industry has deemed short-sighted forforcing companies to charge rates that don't match the risk.

A South Carolina House subcommittee dealing with insuranceissues last week approved an omnibus bill that will create taxincentives for retrofitting homes and require home insurers to givepremium discounts to owners who have made their homes resistant tocatastrophes.

Ms. Reynolds said that while NAMIC supports the tax incentives,they remain neutral on the mandated premium discounts.

The full committee is expected to vote on the measure this week,and the governor said that "indications are the legislation willreceive a floor vote in time to head to the Senate thissession."

Also in the bill will be a tier rating system for the state'sinsurer of last resort so that homes with more risk to catastrophecan be charged a greater rate.

The state recently enlarged the territory of the South CarolinaWind and Hail Underwriting Association, but it still remainslimited to a small coastal area.