SC bars are getting crushed by liquor liability insurance bills. Is there a solution?

On average, insurance companies lost $1.77 for every $1 in premiums earned since 2017. In some years, losses ran north of 200 percent. A possible reason why is that insurance companies in South Carolina are making more and bigger payouts than any other state in the Southeast, the study found. 

“It’s a crisis,” said Russ Dubisky, executive director of the S.C. Insurance Association. “The numbers are staggering, and South Carolina’s an outlier.” 

Yet some have questioned those numbers.

The Department of Insurance’s data suggesting insurance companies are taking massive losses year after year is fishy because the data also shows that insurance companies keep offering liquor liability policies, Jay Angoff, a Washington D.C.-based consumer advocate, told a Senate panel Jan. 31.

“That doesn’t make sense. Insurance companies are not in the business to lose money,” said Angoff, who also is a former insurance commissioner in Missouri.

The Department of Insurance needs to regulate commercial liability insurance, he said, suggesting high rates may be caused, in part, by companies taking advantage of lax rules.

Competition is the best regulator for an open market, said Dubisky, from the Insurance Association. While there are certain exemptions, which are not unique to South Carolina, the companies are still regulated, Dubisky said. 

The debate around how to fix the liability insurance industry dates back to a sweeping 2005 compromise bill that limited the instances in which one party in a multi-defendant civil lawsuit would be forced to pay the entire verdict amount, a concept known as “joint and several liability.”

In 2017, the S.C. Supreme Court ruled that a strict interpretation of the 2005 law meant only defendants specifically named in lawsuits could be included among those who would need to pay damages. So, the apportionment of fault could not include people who had already settled with the plaintiff or who were never named as defendants.