Insurance crisis slamming S.C. coast

An insurance crisis along the S.C. coast could drive people from their homes, devastate the real estate market and slow tourism.

FAR-REACHING EFFECTS

• Businesses might have to pass the extra expenses on to consumers or take a financial hit.

• Apartment building owners might be forced to raise rents.

• Condo owners planning to vacation or move to the S.C. coast might go elsewhere.

INSURANCE MARKET FORCES

• Growth along the coast and rising real estate values have tightened the state’s insurance market. Every time a new home is built, more insurance is needed.

• With skyrocketing reinsurance rates — the insurance that insurance companies buy — and forecasts of severe hurricane seasons, the problem has worsened.

• Condominium projects are seeing the highest increases because few companies are willing to write large policies.

• Rating organizations also have been placing pressure on carriers to reduce risk on the coast by threatening to reduce financial ratings if the carrier is overexposed.

REAL ESTATE MARKET TROUBLE?

• A once-booming real estate industry could take the biggest hit.

• Condo owners can’t afford to pay an HOA fee that is almost as large as their mortgage.

• And when potential buyers find out what the insurance payments are, some might back out. Investors are finding they can’t raise rents enough to cover the increased cost.

• The Myrtle Beach area has seen the number of condos on the market triple since last year and condo sales have fallen by 27 percent.

• Hotels, restaurants and other businesses can’t pass on such increases to consumers without impacting tourism.

• Already, tourism officials are seeing a softening in discretionary spending. Raising hotel rates and other prices would just make the situation worse.

Source: Jenny Burns, The Sun News, Myrtle Beach