An insurance industry trade group is asking South Carolina lawmakers to act cautiously as they try to reform the state's catastrophe insurance market.

The Property Casualty Insurers Association of America (PCI) said in a prepared statement it is urging that attitude on the state Senate Banking and Insurance Subcommittee in Charleston.

Potential reforms in insurance markets for coastal communities are the subject of hearings being held by the committee.

"We urge South Carolina to act cautiously and carefully examine all the available options to opening markets which will encourage and attract capital," said Donald Griffin, PCI vice president for personal lines.

He added, "Some of the most promising steps the state should explore are included in the legislation being considered such as expansion of the windstorm program, improvements to building code requirements and retrofitting, and endorsement of other state and federal initiatives that would protect and enhance the insurance environment for citizens."

PCI is supporting legislation in the South Carolina House that it said would allow for a limited expansion of the state's residual market, known as the South Carolina Wind and Hail Underwriting Association, but would also require it to serve as a market of last resort and charge above-market rates.

The legislation, known as HB 3820, was introduced by Rep. Harry Cato, R-Greenville, chairman of the House Labor, Commerce and Industry Committee. According to the PCI, the bill would also address catastrophic risk and stabilize the marketplace by allowing for homeowners to establish tax-free savings accounts to help pay for windstorm deductibles and tax credits for those who retrofit their homes to better protect them in the event of a major storm.

"Roughly one dollar spent to better protect a property results in four dollars saved following an event," Mr. Griffin said. "The approach outlined in this bill and several being considered at the federal level would give homeowners themselves additional incentives to make improvements and would save many dollars later in disaster assistance and other government programs."

Among the cat-related legislation in South Carolina are Gov. Mark Sanford's proposals for a series of tax incentives to help people retrofit their homes to withstand hurricanes and develop disaster savings accounts. He has also introduced proposals to assist low-income families to purchase insurance and give tax credits to insurers writing policies for coastal risks.

Mr. Sanford's proposals drew praise Friday from Robert P. Hartwig, president of the Insurance Information Institute.