car insurance would increase

By WENDY JEFFCOAT, T&D Staff Writer
Sunday, June 04, 2006

As Gov. Mark Sanford considers whether to sign a bill increasing the minimum amount of car insurance drivers must carry, many insurers worry that higher costs will cause people to hit the road without any coverage at all.

“We simply don’t think it’s the government’s place to tell someone how much insurance they should have to buy,” said Robert Herlong, vice president and regional manager for the Property Casualty Insurers Association of America. “This bill would be like sticking a stick in the eye of thousands of motorists.

“Insurance is purchased solely to protect one’s assets. I’m afraid a substantial number of them will think, ‘I have nothing to lose ... so I’m going to sneak by and go without insurance.’”

Sanford has yet to sign or veto the bill. Governor’s office spokesman Joel Sawyer said Friday that Sanford was still reviewing the bill on its merits, although there are questions about the process since Sen. Gerald Malloy, D-Hartsville, “ramrodded” the bill through.

“We did not like the way this was done by amending the bill in the last days of the session,” Herlong said. “I feel like if most lawmakers knew how this would impact rates, they would not have voted in favor of it. We have asked the governor to veto it. I know they’ve given it proper consideration.”

The bill calls for the basic automobile liability insurance limits on bodily injury liability claims to be increased from $15,000 to $25,000 for one person and from $30,000 to $50,000 for all persons injured in an accident.

House Bill 4622 also would increase property damage claims limit from $10,000 to $25,000.

Allison Love, executive director of Insurance News Service, said a survey of numerous insurance agencies revealed premiums for minimum liability insurance would increase between 7 and 18 percent, or $32-$100 annually, based on the driver and company if the bill becomes law.

“It’s very disruptive to the market,” Herlong said.

Some claim the bill is needed to protect South Carolina drivers from underinsured drivers, while others say it will increase the cost of insurance coverage, possibly leading to more uninsured drivers.

Sawyer said trial lawyers — pointing out that Malloy serves as head of the S.C. Trial Lawyers Association — will benefit from the bill because people will be carrying more insurance.

“It’s a perfect example of what’s wrong with the legislative process in South Carolina when someone who will benefit personally can ramrod it through” the General Assembly, he said.

Malloy blasted those claims, saying Sawyer’s comments were preposterous.

“That’s a shot in the air,” he said of the claims that trial lawyers will benefit from the increase in minimum liability premiums and that he “ramrodded” the bill through the General Assembly. “I think its disingenuous and laughable. I think it’s a display of the lack of curiosity as to why things are done.

“This was something that was contemplated, was discussed, was put before the full body. It gained full support. That’s why it was passed by both bodies and one body (the senate) twice. There was a full opportunity for a debate.”

He said the limits on liability insurance were outdated, having been set in 1974, with the exception of the property damage minimum requirements, which were increased in 1997.

“We are still operating from a 1974 standard,” Malloy said. “The full legislative body had an opportunity to review it, question it, discuss it, and apparently they had the view that we were outdated.”

He said sister states North Carolina and Georgia currently have higher minimum liability requirements than South Carolina.

“The more liability that a person is required to have, the less underinsured coverage a not-at-fault party would have to have,” Malloy said.

He said lawyers, instead of benefitting from individuals carrying more insurance, may be hurt by the increase because people will have more money to settle claims through insurance companies without bringing a lawyer into the mix.

Bruce White, State Farm Insurance spokesman, said historically State Farm has not supported increasing premiums for customers with minimum benefits, but added that the company will have no choice but to abide by the law — if the new requirements become law.

Not all insurance agents and companies are against the bill. Patricia Brown, owner of Crossroads Insurance Agency in Orangeburg, said she thinks the heightened minimum is an excellent idea.

“Of course, my (customers) are going to fuss because their premiums are going to go up,” she said. “But I think it’s a wonderful idea.”

Brown applauded North Carolina’s insurance system and said it works so much better than South Carolina’s — namely because of the higher minimum requirements.

“They (customers) want the bare minimum until there’s an accident,” she said, “ and then they want to know why we didn’t sell them more. If the state minimum requirements are higher, then they don’t have any choice.”

She said customers who have had to bear the burden of being hit by people with too little insurance will benefit greatly from the increase as well.

Brown said her agency already requires customers to purchase at least $25,000 in property liability insurance, simply because so many cars are worth more than $10,000.

“We can (already) set the limits where the bare minimum we write is 25-50-25, so if they don’t want it, they have no choice but to go somewhere else,” she said. “I think it would be a wonderful idea. I’m all for it.”

But South Carolina Farm Bureau Insurance’s Corporate Communications Director Susan Merrill said Farm Bureau isn’t sold on the idea.

Merrill said the increase will affect approximately 20 percent of the company’s policy holders carrying minimum liability insurance. The premium for some insured customers could increase by as much as $118 per year.

“The folks who carry minimum liability are those who can least afford an increase in insurance costs,” she said, and they may choose to drive uninsured instead of pay more. “If they can only afford 15-30-10, you wonder if they can afford the increased premiums that come with raising the limit to 25-50-25.”

Merrill said once additional money is available, more attorney’s will become involved. And that will will have a long-term impact on all drivers.

“Such a significant change in social policy was made so hastily on the floor of the senate and house,” she said. “We certainly support a detailed, thorough review of this state’s minimum liability requirements.

“We just think a little more time should have been spent on the subject.”