valid estimate of any insurance premium savings they may realize, the IPSPR developed a methodology using Richland County’s and the City of Columbia’s GIS technology to identify all of the residential properties in each of the PPC rating areas. Once these properties were identified, original PPC ratings were assigned to the properties in order to calculate baseline insurance rates for a sample of residential properties within each rating area.
IPSPR staff worked with the South Carolina Department of Insurance9 to identify the insurance companies writing most of the residential and commercial property and casualty insurance policies in Richland County. IPSPR staff contacted these companies to request premium information for each of the residential values using the original and new PPC ratings. To ensure comparable insurance rates, IPSPR staff asked the insurance companies to make the following assumptions:
No discounts for multiple policies or security alarms.
A deductible of $500. This is the typical deductible found in residential policies.
Using a random sample of residential properties in each jurisdictional area, IPSPR identified the two most common construction types in Richland County—brick veneer and vinyl siding—and asked the companies to provide rates for each. Since insurance premiums also are dependent upon the age of the home, IPSPR calculated the average age of structures around the 25th percentile, median, and 75 percentile of recorded residential building values from the random sample of properties to provide a representative cross-section of homes by age, construction type and value. th
Impact Analysis of PPC Rate Changes in Richland County
The results presented below are projected savings based on the average insurance premiums of the companies that provided information for IPSPR’s study. An individual homeowner’s premium may vary significantly from the percentages reported below. The insurance company writing the policy, choice of deductible, claims history, credit rating, discounts applied to the policy, home construction material, age of the home, and optional coverage riders all affect the cost of the policy.
Since the PPC ratings have less effect on property and casualty insurance rates for manufactured or mobile homes, the results of this analysis do not apply to those structures. The PPC ratings will have an effect on policy holders who have renter’s insurance or own condominiums, but those rates were not analyzed in IPSPR’s study.
Homeowners living in an area that had been rated nine realized the largest savings on insurance premiums. The reductions in insurance premiums in these areas ranged from 8% to 49% for brick homes and 11% to 53% for homes with vinyl siding, depending on the insurance company. Some of the districts in these areas had six to nine PPC ratings. The reason for the large variance in the reductions cited above is that two insurance companies have been using a PPC rating of six for all residential properties in these areas, regardless of a property’s distance from a fire hydrant. This has lessened the potential impact of the change in PPC ratings. Insurance savings to homeowners in these areas vary greatly, depending on the insurance company.