I’m writing this from the new library in downtown Columbia, South Carolina. It’s a big, open all glass building that I wouldn’t want to be in during a hurricane. Thanks to a series of insurance reforms, here, however, it looks like it will get rebuilt quickly no matter what happens. South Carolina, for the most part, has taken the right insurance reform route when it comes to wind coverage while other states have gone wrong.
Some background first: in the wake of soaring post Hurricane Katrina rates, nearly every hurricane-prone state implemented insurance reforms. In most places, these reforms involved states taking on liability for their citizens: Florida, as I write about in the current Weekly Standard, could well go bankrupt. While states like Texas and Mississippi won’t go bankrupt, they will likely need to raise taxes on everyone to pay for the massive bailouts of mostly well off homeowners.
South Carolina, on the other hand, has decided to provide some immediate relief and otherwise get out of the way. Some efforts that look like market interventions may actually speed the transition to an almost-all-private market. There was a populist outcry to do the opposite but, somehow, the political process worked and came up with a pretty decent–although imperfect–plan. Insurance rates are stable. People seem reasonably content with the plan. And, unlike other states, South Carolina may actually increase its own resistance to hurricanes.
I’ve met with the governor, his chief of staff, the insurance commissioner, insurance agents, and key members of the legislature. I know what happened but I still can’t really figure out why. Nothing about South Carolina indicates it would go in the correct direction but, somehow, it just did. And, in so doing, the state has secured a minor but important victory for freedom.