South Carolina’s Liquor Liability Insurance Market Faces Deepening Crisis

South Carolina’s liquor liability insurance market is in serious financial distress, with insurers losing an average of $1.77 for every $1.00 earned in premiums since 2017, according to a study by the South Carolina Department of Insurance. The state’s claim frequency has consistently outpaced that of neighboring states, with insurers experiencing an alarming 290% combined ratio in 2022, meaning they paid out nearly three times the premiums collected in claims and expenses.

Despite these financial losses, the number of insurers in the market has remained relatively stable, with 48 participants since 2019. However, three major insurance groups dominate the sector. Premiums have more than doubled from $7.6 million in 2017 to $17 million in 2022, largely due to rising rates rather than an expansion of policyholders.

South Carolina’s liquor liability crisis is unique compared to its neighboring states, where insurers have seen profits. For example, North Carolina’s liquor liability combined ratio ranged from 45% to 76% during the same period. While South Carolina’s claim severity is now more in line with regional trends, its claim frequency remains disproportionately high, exceeding Florida, Georgia, and North Carolina, where no state recorded a frequency rate higher than five between 2019 and 2022.

Without intervention, the ongoing financial strain could impact insurers’ willingness to continue offering liquor liability coverage in the state, potentially leading to affordability and availability issues for businesses.