In 1989, when the average countrywide auto insurance expenditure stood at $551.95, South Carolina’s average was $494.25, almost $60 dollars cheaper. By 2010 the state average for South Carolina had risen by 49.3 percent to $737.74. During the same period, the countrywide average went up by 43.3 percent to $791.22. Despite South Carolina’s higher rate in increase, auto insurance costs remained lower than the countrywide average. Moreover, South Carolina held steady over the 21 years as the 23rd most expensive state in terms of auto insurance costs.
The Consumer Federation of America found, in its November 2013 study, that one of the main reasons some states did better than others at keeping rates rises low was stringent regulation of auto insurance. To illustrate, states that employed a Prior Approval (PA) system, the most stringent, showed an average rise of 48 percent in insurance costs over the period. On the other hand, states that were deregulated showed a rise of 70.1 percent.
South Carolina employs a FLEX system which is lax compared to the PA system (where rates are filed and need to be approved before they can be implemented in the marketplace). In the FLEX system, insurers can alter rates within a range without any notice. Average costs went up by 66.8 percent in states that use the FLEX system.
By far the most successful state in the country was California where costs went down by 0.3 percent, the only state where costs went down in the 21 years ending 2010. It is not a coincidence that California also has the most stringent and wide reaching as well as pioneering auto insurance regulation. As of 2010 auto insurance costs in South Carolina were lower than across the country, on average. However, South Carolina does not have any stringent regulation in place and may see costs rising faster if timely action is not taken.