South Carolina Republican Gov. Mark Sanford's announcement of his administration's approach to solving the insurance shortage for coastal properties has drawn support from an insurers' trade group.

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

Florida has offered primary insurers below-cost reinsurance and mandated that they reduce rates to reflect this. Insurers say if there is a major catastrophe, taxpayers will be stuck because the program is insufficiently funded.

Mr. Sanford said that Insurance Commissioner Scott Richardson has been in talks with an insurer about writing more coastal coverage in the state.

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

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

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

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

A South Carolina House subcommittee dealing with insurance issues last week approved an omnibus bill that will create tax incentives for retrofitting homes and require home insurers to give premium discounts to owners who have made their homes resistant to catastrophes.

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 will receive a floor vote in time to head to the Senate this session."

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

The state recently enlarged the territory of the South Carolina Wind and Hail Underwriting Association, but it still remains limited to a small coastal area.

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S.C. Coastal Insurance Plan Draws NAMIC Support

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