Sc Senate Bill Aims To Fix Business Insurance Crisis. Critics Say It Benefits Insurers.

COLUMBIA — Like business owners across South Carolina, Josh Painter has been paying increasingly more for insurance over the last decade.

"It's jumping 20 or 30% every year," he told the SC Daily Gazette.

That increase, Painter said, is passed on to customers of his company, Kirby Sanitation, an Upstate garbage and recycling removal business with more than 70 vehicles and about 75 employees.

"All of our customers are the ones that are having to pay for the price increase," said the 40-year-old from Greer.

According to advocates of legislation that would overhaul South Carolina's rules for personal injury lawsuits, state law is to blame for skyrocketing insurance rates for businesses of all sizes and sectors. If sued and found at all liable for someone's injuries, a business in South Carolina can be forced to pay 100% of court-awarded damages, even if it's only 1% at fault. The potential for high-dollar payouts drives up rates.

"Every time we turn around, we're worried somebody's going to sue us and take us to the limits," said Painter, noting his policy is $3 million. "It could put us out of business."

A bill touted as a solution has the support of Gov. Henry McMaster but has divided the Republican caucus. The marketing effort to sway votes has included TV ads on Fox News as well as a barrage of calls, emails, texts, and so many posts on social media, the orchestrated criticism even got the attention of Donald Trump Jr.

"Hey South Carolina, what's going on with this? This bill seems like a complete disaster," he posted on X last month.

Debate opened Tuesday on the legislation led by Senate Majority Leader Shane Massey of Edgefield and Senate President Thomas Alexander of Walhalla and co-sponsored by nine other Republicans.

It could last for weeks.

What will ultimately emerge is unclear: It's not a typical debate that lines up by party or geography. It pits Republicans against Republicans, lawyers against insurers, and — more specifically — accident attorneys against business attorneys.

The bill overhauls how liability can be assigned in civil lawsuits in South Carolina, so that businesses pay proportionally to whatever they did wrong. For example, a business deemed 15% responsible would have to pay 15% of the verdict's sum.

"You should never be responsible for what I cause. That's what I believe," Massey said from the podium. "Right now, South Carolina not only allows that but requires that in certain situations."

This bill "stops that," he said, adding South Carolina's out of step with other Southeastern states. "This is nothing revolutionary."

Critics say the proposal makes it more difficult for victims to be adequately compensated.

The beneficiaries, they contend, are the insurance companies that will no longer have to cover large awards or settlements and may just pocket the extra profits. They note there's no guarantee that rates will drop.

The expansive bill deals with a host of business insurance issues, including restaurants' liability for serving alcohol, medical malpractice, and negligence for construction defects.

The South Carolina Association for Justice, an influential advocacy group for trial lawyers, is working to kill the bill.

"It's too vast," said Sydney Lynn, the group's president. "There's not one single amendment that would correct it."

Truckers and restaurantsThe president of the South Carolina Trucking Association said his members — mostly one- or two-truck businesses — face a high probability of being forced to pay out-of-proportion damages for accidents on the road.

While the goal is certainly a legal system that's fair to injured victims, "you don't want to create more victims" with out-of-whack awards, said Rick Todd, the trucking group's longtime president.

Advocacy groups backing the bill include the truckers, the South Carolina Manufacturers Alliance and the South Carolina Restaurant and Lodging Association.

In 2017, the Legislature passed a law requiring businesses that serve alcohol past 5 p.m. to carry a $1 million minimum liquor liability policy in case someone gets overserved and ends up injuring themselves or killing someone else. Since then, bars, restaurants and even golf courses have seen their insurance premiums rise higher and higher.

As a result, businesses are closing, and the number of insurers writing the full $1 million coverage has dropped to three, Susan Cohn, president of the advocacy group for hotels and restaurants, told a Senate committee last week.

"They have been closing in almost every area of the state," while new restaurants trying to open struggle to get insurance, she told the SC Daily Gazette.

Insurers stopped writing liquor liability policies in South Carolina because they're losing money.

From 2017 to 2022, insurers lost $1.77 for every $1 in premiums they collected for those policies in the Palmetto State. But they made a profit in neighboring states, according to a January 2024 report from the state Department of Insurance.

"When they look around South Carolina, and they see what's going on, they assess their risk to be higher," Massey said. So, they either charge more or stop writing policies, which further drives up premiums with insurers that stay.

On Wednesday, McMaster again called on legislators to send him a solution to sign into law.

Standing alongside Massey and Alexander in a crowded Statehouse lobby, the governor said the state's legal framework has created uncertainty.

"We must eliminate that uncertainty," he said, echoing his comments from January's State of the State address.

"Individuals and businesses, both large and small, are becoming unduly penalized for the actions of others — too often through crippling financial judgments and skyrocketing insurance premiums," he said.

As McMaster spoke, opponents of the bill flashed stickers, signs and T-shirts calling for "no" votes.

Proponents included Donnie Watts, president of Palmetto State Insurance of Lexington, who said 15 of the forest industry businesses he used to insure have shuttered due to increasing premiums. He said it's the attorneys who are really profiting from lawsuits. The client they're representing may see 20% to 30% of whatever they're awarded, he said.

Accusations flyOpponents are particularly peeved about a provision that gives insurers three months to decide if they're going to pay the policy's maximum to someone who files a claim. They get an additional 10-month window before someone can sue to force a payout.

Opponents say the potential 13-month delay is too long for most people and benefits only insurance companies.

Chris Pracht, a personal injury lawyer who came to the Statehouse from Anderson, said that clause should be deleted from the bill.

"How does the 10-month rule help anyone but an insurance company?" he said. "If you're a business and you have an insurance claim, how does it help you?"

A concerted effort by the state Association for Justice to kill the bill entirely included launching the Coalition for Fair Insurance Rates. The campaign's website encourages people to tell their legislators to vote against the overhaul and "put people above insurance company profits."

Criticism has focused on Massey, with social media posts alleging the lawyer is aligned with the insurance industry to benefit clients. He has dismissed the personal accusations as part of a "successful disinformation campaign." For him, he said, it's a matter of fairness.

Subcommittee hearings on the bill got testy.

At a meeting last month, Lee Cope, the Association for Justice's chair of medical negligence law, said he didn't appreciate being labeled as a "greedy trial lawyer."

In response, Massey said, "I bet you and your colleagues haven't been told you've been bought."

On the debate's opening day, a freshman senator suggested it was the trial lawyers' association that tried to buy his vote.

"Here's the quiet part out loud," said Sen. Tom Fernandez, R-Summerville, who's also a lawyer.

Speaking into the microphone Tuesday at his desk, he said, "Did you know that the trial lawyer lobby has offered me campaign fundraisers in the amount of $50,000 to $100,000 per campaign if I voted against this?"

Alexander, who presides over the Senate as president, immediately cut him off. The debate went on pause as senators huddled over such a stunning breach of decorum in the upper chamber, then resumed as if nothing happened.

The state Association of Justice issued a statement saying Fernandez's claim "could not be farther from the truth."

Fernandez later issued his own statement to reporters walking it back.

People on both sides of the bill have "indicated their willingness to host fundraisers on my behalf." However, the statement continued, "I did not perceive those offers as a quid-pro-quo in exchange for my vote on this bill … I did not intend to accuse anyone of wrongdoing, but to simply highlight the realities of how legislative debates unfold, publicly and behind the scenes.

"Out of respect for the Senate and to maintain decorum, I agreed to discontinue that line of questioning," he concluded.

Neither he nor other senators would address it publicly any further. But the freshman likely got schooled on the rules of the Senate, which forbid any senator to imply during a debate, either directly or indirectly, "any conduct or motive unworthy or unbecoming a senator."

No guaranteesNumerous senators have noted during the floor debate that no one from the insurance industry testified at public hearings. People from various other groups affected by the bill testified, but nobody came from an insurance company.

Critics said they need assurances the legislation will work as intended and bring down insurance premiums.

"Can you show me anywhere in your bill where there's going to be a reduction in premiums for liquor liability?" Sen. Billy Garrett, R-Greenwood, asked Massey on Tuesday.

Insurance companies can't make such guarantees, Massey said, adding they react to risk evaluations and how policies and events change their risk, not hypotheticals.

He pointed to states like Florida, where Gov. Ron DeSantis announced last month that three auto insurance carriers had significantly reduced their rates several years after legislators in that state overhauled litigation rules.

Sen. Tom Davis, a real estate attorney, said the goal of the legislation is to make South Carolina more business-friendly, so that more insurers write policies in the state. The competition will drive down the rates as businesses can shop for better prices, said the Beaufort Republican.

SC Daily Gazette Editor Seanna Adcox contributed to this report.

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