South Carolina Looks to Increase Home Mitigation Funding

By Michael Adams | April 17, 2014

South Carolina lawmakers are moving forward with a plan to increase grants to homeowners who strengthen their homes against storm damage.

The South Carolina Senate Finance Committee approved the “Competitive Insurance Act,” which will provide $1.6 million additional funding for the Safe Home South Carolina program by allowing the state’s Department of Insurance to retain more premium taxes levied against insurers.

Created in 2007, the Safe Homes program is designed to encourage homeowners to mitigate their homes against storm damage and thereby lower their homeowners premiums through credits offered by insurers.

Under the program, homeowners whose primary residence is value at $150,000 or less and have a gross income that does not exceed 80 percent of the median gross income in that county can qualify for up to a $5,000 grant to retrofit their homes. Homeowners whose homes are valued between $150,000 and $300,000 may also  qualify for a dollar-to-dollar matching grant of up to $5,000.

State Senator Tom Davis (R-Beaufort), who sponsored the legislation, said it would help lower premiums and reduce the damage that comes with hurricanes and other storms.

“These are people who are really getting pinched by increased premiums, those with lower incomes and modest incomes,” said Davis. “The idea is to help them help themselves.”

Under current law, premium taxes are collected by the department of insurance and then funneled to the state’s general revenue fund.

Under the bill, homeowners’ insurers would see a reduction in their premium taxes from 1.25 percent to one percent on multi-peril policies written in inland counties. It also increases the tax credit on multi-peril homeowners’ policies written in coastal areas from one percent to 1.25 percent. It then directs one percent of the premium taxes currently levied against brokers who place business with surplus lines to the Safe Home program.

The bill also calls for the department to retain one percent in premium taxes for an additional $1.5 million in premium taxes and $140,000 in surplus lines taxes for a total of more than $1.6 million to be used for the Safe Home program. That amount would then be subtracted from the premium tax revenue that would otherwise be forwarded to the state’s general fund.

State Insurance Commissioner Ray Farmer said the money is needed as the Safe Home program has gained in popularity.

“The program has been a huge success and I whole heartily support efforts to support it,” said Farmer. “We continue to receive applications and this will help us address a backlog.”

Fiscal year 2013-2014 marks the first time the program’s revenue has outstripped its funding. To date, the program has received 1,271 applications with total revenues of $2.87 million while it has spent nearly $3,000. Of those applications, 55 percent were for matching grants and 45 percent for non-matching grants.

By comparison, in fiscal year 2011-2012, the program received just 683 applications, which the program paid out a total of $2.3 million, while taking in $2.7 million in funding.

Since the program’s inception in 2007, it has awarded 3,300 grants for a total of $13 million.

Senator Clementa Pinckney (D-Jasper) said the program has been helpful in his district, which includes the coastal counties of Beaufort, Jasper and Charleston.

“This has been very important in our area, the low county, because we have a lot of storms and not only hurricanes,” said Pinckney. “We have found the program to be very beneficial.

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