Range of Savings
8 – 53%
13 – 15%
8 – 12%
0 - 2%
0 – 5%
0 - 5%
*Split rating areas.
The reduction in insurance premiums in the areas with an original PPC rating of five ranged from 0% to 5%. Some insurance companies’ rates are not affected by improvements in PPC ratings below a five, so changes in PPC ratings may not result in savings for all customers. This practice of “banding” ratings was reported in several of the studies cited earlier in this report.
Financial Impact on Residential Properties
There are over 65,000 single-family or duplex properties in Richland County outside the city limits of Columbia that are impacted by the changes in PPC ratings.10 In order to estimate the total financial impact on residential property insurance rates for these properties, IPSPR staff took the average savings for each of the three sample properties in each PPC rating area (25th, median, and 75th percentile values) and multiplied those amounts by one-third the number of residential properties in that area to estimate the total savings in that area. The totals for all eight areas were summed to estimate the impact on residential premiums for the entire county. The estimate for the total financial impact on residential property insurance rates in Richland County will be $5.5 million, once all of the PPC ratings became effective on April 1, 2007.
Because Richland County’s data for commercial and other non-residential properties did not provide the level of detail needed for IPSPR’s analysis, only general information on insurance rates for non-residential properties was included. In addition to construction type and age of the structure, there are several factors that impact a commercial property’s insurance rate, including business type or property use, building contents, and the use of sprinkler systems.
There are close to 10,000 commercial structures in Richland County outside the city limits of Columbia. Commercial property owners will save from 2% to 36% on property insurance, depending on their insurance company, the type of business, and their location in Richland County. As is the practice with residential property insurance, some insurance companies band the PPC ratings when setting commercial property insurance rates. One company bands PPC ratings of one through four in one band, and five and six in another.