H 3781 Session 111 (1995-1996)
H 3781 General Bill, By J.G. Felder
A Bill to amend Section 38-73-455, as amended, Code of Laws of South Carolina,
1976, relating to automobile insurance rates, so as to delete certain language
and provisions, and provide, among other things, that an automobile insurer
shall file and offer for automobile insurance a base rate as defined in
Section 38-73-457 which is subject to all surcharges or discounts, if any,
applicable under any approved merit rating plan, credit or discount plan
promulgated by the Department of Insurance or approved by the Director of the
Department of Insurance or his designee and subject to allocation and
recoupment surcharges provided for in Chapter 77, Title 38.-short title
03/09/95 House Introduced and read first time HJ-5
03/09/95 House Referred to Committee on Labor, Commerce and
Industry HJ-11
A BILL
TO AMEND SECTION 38-73-455, AS AMENDED, CODE OF
LAWS OF SOUTH CAROLINA, 1976, RELATING TO
AUTOMOBILE INSURANCE RATES, SO AS TO DELETE
CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE,
AMONG OTHER THINGS, THAT AN AUTOMOBILE INSURER
SHALL FILE AND OFFER FOR AUTOMOBILE INSURANCE A
BASE RATE AS DEFINED IN SECTION 38-73-457 WHICH IS
SUBJECT TO ALL SURCHARGES OR DISCOUNTS, IF ANY,
APPLICABLE UNDER ANY APPROVED MERIT RATING
PLAN, CREDIT OR DISCOUNT PLAN PROMULGATED BY
THE DEPARTMENT OF INSURANCE OR APPROVED BY THE
DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS
DESIGNEE AND SUBJECT TO ALLOCATION AND
RECOUPMENT SURCHARGES PROVIDED FOR IN CHAPTER
77, TITLE 38; TO AMEND SECTION 38-73-457, AS
AMENDED, RELATING TO FILING INFORMATION ON BASE
RATES FOR AUTOMOBILE INSURANCE AND THE
EFFECTIVE DATE OF THE RATES, SO AS TO DELETE
CERTAIN PROVISIONS, AND PROVIDE, AMONG OTHER
THINGS, THAT, EFFECTIVE OCTOBER 1, 1995, THE
DIRECTOR OR HIS DESIGNEE SHALL DISALLOW THE
FURTHER USE OF THE OBJECTIVE STANDARDS RATE
PREVIOUSLY FILED IN ACCORDANCE WITH THIS
SECTION; TO AMEND SECTION 38-73-735, AS AMENDED,
RELATING TO THE PLAN FOR CREDITS AND DISCOUNTS
FOR AUTOMOBILE INSUREDS, SO AS TO DELETE CERTAIN
LANGUAGE, AND PROVIDE THAT IF AN INSURANCE
CREDIT OR DISCOUNT PLAN, OTHER THAN THAT
PROMULGATED BY THE DIRECTOR OR HIS DESIGNEE, IS
GIVEN TO AN INSURED PURSUANT TO THIS SECTION,
THE POLICY MAY BE CEDED TO THE REINSURANCE
FACILITY; TO AMEND SECTION 38-73-760, AS AMENDED,
RELATING TO THE STATE RATING AND STATISTICAL
DIVISION AND UNIFORM STATISTICAL PLANS, SO AS TO
PROVIDE THAT THE SAFE DRIVER DISCOUNT SHALL NOT
BE INCLUDED IN THE RATE OR PREMIUM CALCULATION
FOR CERTAIN DRIVERS AND APPLICANTS; TO AMEND
THE 1976 CODE BY ADDING SECTION 38-73-780 SO AS TO
REQUIRE THE STATE RATING AND STATISTICAL
DIVISION TO DEVELOP AND FILE A LOSS COMPONENT
FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE
COVERAGES BASED ON THE TOTAL EXPERIENCE OF ALL
INSURERS IN THIS STATE INCLUDING RISKS CEDED TO
THE REINSURANCE FACILITY; TO AMEND SECTION
38-73-1420, AS AMENDED, RELATING TO THE
REQUIREMENT THAT THE BOARD OF GOVERNORS OF
THE REINSURANCE FACILITY FILE AN EXPENSE
COMPONENT AND THE USE OF THE COMPONENT AFTER
APPROVAL, SO AS TO DELETE CERTAIN LANGUAGE AND
PROVISIONS, AND PROVIDE, AMONG OTHER THINGS,
THAT THE BOARD SHALL FILE AN EXPENSE COMPONENT
AS DEFINED UNDER SECTION 38-73-1400(2) FOR PRIVATE
PASSENGER AUTOMOBILE INSURANCE RATE OR
PREMIUM CHARGES WHICH MUST ACCURATELY
REFLECT THE ACTUAL EXPENSES OF THE REINSURANCE
FACILITY WITHOUT PROFIT AND FOR USE WITH THE
PURE LOSS COMPONENT FOR PRIVATE PASSENGER
AUTOMOBILE INSURANCE COVERAGES DEVELOPED
UNDER SECTION 38-73-780; TO AMEND SECTION
38-73-1425, RELATING TO THE FINAL RATE OR PREMIUM
CHARGE FOR PRIVATE PASSENGER AUTOMOBILE
INSURANCE RISK CEDED TO THE REINSURANCE
FACILITY, SO AS TO DELETE CERTAIN LANGUAGE, AND
PROVIDE, AMONG OTHER THINGS, THAT THE BASE RATE
FOR ANY PRIVATE PASSENGER AUTOMOBILE INSURANCE
RISK CEDED TO THE FACILITY BY AN INSURER SHALL
NOT BE LESS THAN THE BASE RATE WHICH WAS IN
EFFECT AND IN USE ON NOVEMBER 1, 1994 BY THOSE
AUTOMOBILE INSURERS CONTRACTED PURSUANT TO
SECTION 38-77-590(a) FOR RISK WRITTEN BY THEM
THROUGH PRODUCERS DESIGNATED PURSUANT TO THAT
SAME SECTION; TO AMEND SECTION 38-77-10, AS
AMENDED, RELATING TO THE DECLARATION OF
PURPOSE FOR THE STATE'S AUTOMOBILE INSURANCE
LAW, SO AS TO DELETE CERTAIN LANGUAGE AND
PROVISIONS, AND PROVIDE REFERENCE TO THE RISK
AND TERRITORIAL CLASSIFICATION PLAN
PROMULGATED BY THE DEPARTMENT OF INSURANCE OR
THE REINSURANCE FACILITY RATE PLANS; TO AMEND
SECTION 38-77-30, AS AMENDED, RELATING TO
DEFINITIONS UNDER THE AUTOMOBILE INSURANCE
LAW, SO AS TO ADD DEFINITIONS FOR "CEDE"
OR "CESSION", "CLEAN RISK
SUBSIDY", "STATE UNIFORM RATE", AND
"FACILITY UNIFORM RATE"; TO AMEND
SECTION 38-77-110, AS AMENDED, RELATING TO THE
REQUIREMENT UPON AUTOMOBILE INSURERS TO INSURE
AND EXCEPTIONS, SO AS TO DELETE CERTAIN
CONDITIONAL LANGUAGE REGARDING INSURABLE RISK,
AND PROVIDE THAT EVERY AUTOMOBILE INSURANCE
RISK CONSTITUTES AN INSURABLE RISK; TO AMEND
SECTION 38-77-140, RELATING TO AUTOMOBILE
INSURANCE AND BODILY INJURY AND PROPERTY
DAMAGE LIMITS, SO AS TO PROVIDE FOR FIFTEEN
THOUSAND DOLLARS, RATHER THAN FIVE THOUSAND
DOLLARS, BECAUSE OF INJURY TO OR DESTRUCTION OF
PROPERTY OF OTHERS IN ANY ONE ACCIDENT; TO
AMEND SECTION 38-77-280, AS AMENDED, RELATING TO
COLLISION COVERAGE AND COMPREHENSIVE COVERAGE
FOR AUTOMOBILE INSURANCE PURPOSES, SO AS TO
DELETE CERTAIN LANGUAGE AND PROVISIONS, AND
PROVIDE, AMONG OTHER THINGS, THAT AUTOMOBILE
INSURERS MAY REFUSE TO WRITE PHYSICAL DAMAGE
INSURANCE COVERAGE TO AN APPLICANT OR EXISTING
POLICYHOLDER, ON RENEWAL, WHO HAS COLLECTED
BENEFITS PROVIDED UNDER AUTOMOBILE INSURANCE
PHYSICAL DAMAGE COVERAGE DURING THE THIRTY-SIX
MONTHS IMMEDIATELY PRECEDING THE EFFECTIVE
DATE OF COVERAGE FOR TWO OR MORE TOTAL FIRE
LOSSES OR TWO OR MORE TOTAL THEFT LOSSES; TO
AMEND THE TITLE OF ARTICLE 5 OF CHAPTER 77, TITLE
38 FROM "REINSURANCE FACILITY AND
DESIGNATED PRODUCERS" TO "REINSURANCE
FACILITY, SERVICING CARRIERS, AND PRODUCERS";
TO AMEND SECTION 38-77-530, AS AMENDED, RELATING
TO THE PLAN OF OPERATION OF THE REINSURANCE
FACILITY, SO AS TO PROVIDE, AMONG OTHER THINGS,
THAT THE PLAN SHALL PROVIDE THAT EVERY MEMBER,
UPON ANY ASSESSMENT RELATED TO PRIVATE
PASSENGER AUTOMOBILE RISKS, SHALL COLLECT THAT
ASSESSMENT FOR PAYMENT TO THE REINSURANCE
FACILITY BY WAY OF A SURCHARGE ON AUTOMOBILE
INSURANCE POLICIES ISSUED BY THE MEMBER AND
THAT SUCH SURCHARGES SHALL BE A PERCENTAGE OF
PREMIUM ADOPTED BY THE GOVERNING BOARD OF THE
FACILITY AND APPROVED BY THE DIRECTOR OR HIS
DESIGNEE; TO AMEND THE 1976 CODE BY ADDING
SECTION 38-77-535 SO AS TO PROVIDE THAT FOR
CERTAIN PERIODS, CERTAIN PERCENTAGES OF THE
CLEAN RISK ALLOCATION MUST BE ASSESSED AND
COLLECTED BY MEMBER INSURERS OF THE
REINSURANCE FACILITY; TO AMEND THE TITLE OF
SECTION 38-77-540 FROM "DUTIES OF CEDING
INSURER" TO "FACILITY RATE PLANS"; TO
AMEND SECTION 38-77-540, RELATING TO THE DUTIES OF
A CEDING INSURER UNDER THE AUTOMOBILE
INSURANCE LAW, SO AS TO DELETE THE CURRENT
PROVISIONS OF THE SECTION, AND PROVIDE, AMONG
OTHER THINGS, THAT THE REINSURANCE FACILITY
SHALL ACCEPT CESSIONS ON A POLICY OF PRIVATE
PASSENGER AUTOMOBILE INSURANCE AT THE OPTION
OF AN INSURER BUT ONLY AT THE RATE OR PREMIUM
CHARGE AS DETERMINED UNDER THE RATING PLANS
ESTABLISHED BY THE GOVERNING BOARD AND
APPROVED BY THE DIRECTOR OR HIS DESIGNEE,
SUBJECT, HOWEVER, TO SECTION 38-77-950 REGARDING
REASONABLE UTILIZATION OF THE FACILITY BY
MEMBER COMPANIES; TO AMEND SECTION 38-77-580, AS
AMENDED, RELATING TO THE GOVERNING BOARD OF
THE REINSURANCE FACILITY, SO AS TO CHANGE THE
METHOD OF APPOINTING CERTAIN MEMBERS TO THE
BOARD; TO AMEND SECTION 38-77-585, RELATING TO
ADDITIONAL BOARD MEMBERS OF THE REINSURANCE
FACILITY, SO AS TO DELETE REFERENCES TO
DESIGNATED INSURERS AND, INSTEAD, REFER TO
CONTRACTED INSURERS; TO AMEND THE TITLE OF
SECTION 38-77-590 FROM "DESIGNATED
PRODUCERS" TO "SERVICING CARRIERS AND
PRODUCERS"; TO AMEND SECTION 38-77-590, AS
AMENDED, RELATING TO DESIGNATED PRODUCERS
UNDER REINSURANCE FACILITY PROVISIONS, SO AS TO
DELETE CERTAIN LANGUAGE AND PROVISIONS, AND
PROVIDE, AMONG OTHER THINGS, THAT THE DIRECTOR
OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE,
AFTER CONSULTATION WITH THE GOVERNING BOARD OF
THE REINSURANCE FACILITY, SHALL DIRECT THE BOARD
TO CONTRACT WITH ONE OR MORE INSURERS MEETING
ELIGIBILITY REQUIREMENTS PROMULGATED BY THE
BOARD TO ACT AS SERVICING CARRIERS FOR THE
WRITING OF AUTOMOBILE INSURANCE THROUGH
PRODUCERS ASSIGNED TO THE SERVICING CARRIER BY
THE BOARD; TO AMEND SECTION 38-77-600, AS
AMENDED, RELATING TO THE REINSURANCE FACILITY
RECOUPMENT CHARGE, SO AS TO DELETE REFERENCES
TO AN OBJECTIVE STANDARDS RATE, DELETE OTHER
LANGUAGE, AND PROVIDE, AMONG OTHER THINGS,
THAT EFFECTIVE FOR THE RECOUPMENT PERIOD
BEGINNING JULY 1, 1996, THROUGH JUNE 30, 1997, .55
MULTIPLIED BY THE RECOUPMENT IS TO BE BORNE BY
RISKS HAVING ZERO SURCHARGE POINTS UNDER THE
UNIFORM MERIT PLAN PROMULGATED BY THE
DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS
DESIGNEE; TO AMEND SECTION 38-77-620, AS AMENDED,
RELATING TO THE AUTOMOBILE INSURANCE LAW AND
THE INCLUSION OF RECOUPMENT CHARGES IN RATES, SO
AS TO DELETE REFERENCES TO AN OBJECTIVE
STANDARDS RATE; TO AMEND SECTION 38-77-910, AS
AMENDED, RELATING TO THE AUTOMOBILE INSURANCE
LAW AND UNLAWFUL DISTINCTIONS BETWEEN
POLICYHOLDERS OR APPLICANTS, SO AS TO PROVIDE
THAT IT IS AN ACT OF UNLAWFUL DISCRIMINATION FOR
AN AUTOMOBILE INSURER TO MAKE ANY DISTINCTION
BETWEEN AUTOMOBILE INSURANCE POLICYHOLDERS OR
APPLICANTS FOR AUTOMOBILE INSURANCE WITH
RESPECT TO COVERAGE, RATES, CLAIMS, OR OTHER
SERVICES EXCEPT AS THE DISTINCTIONS ARE PROVIDED
FOR IN THE RATING PLANS FOR THE CLASSIFICATION OF
RISKS AND TERRITORIES PROMULGATED BY THE
DEPARTMENT OF INSURANCE AND THE REINSURANCE
FACILITY RATE PLANS; TO AMEND SECTION 38-77-940,
RELATING TO THE AUTOMOBILE INSURANCE LAW,
AVOIDING CERTAIN CLASSES OR TYPES OF RISKS,
EXCEPTIONS, AND CANCELING AN AGENT'S
REPRESENTATION, SO AS TO DELETE THE LANGUAGE
PROHIBITING AN AUTOMOBILE INSURER FROM
PROVIDING TO INSURANCE AGENTS, DIRECTLY OR
INDIRECTLY, ORALLY OR IN WRITING, ANY LISTING OF
CLASSES OR TYPES OF AUTOMOBILE INSURANCE RISKS
WHICH THE INSURER CONSIDERS NECESSARY TO
REINSURE IN THE REINSURANCE FACILITY; TO AMEND
SECTION 38-77-950, AS AMENDED, RELATING TO
UNREASONABLE OR EXCESSIVE USE OF THE
REINSURANCE FACILITY BY AN INSURER AND NOTICE TO
A POLICYHOLDER THAT HIS AUTOMOBILE INSURANCE
POLICY IS IN THE FACILITY, SO AS TO DELETE CERTAIN
LANGUAGE, AND PROVIDE TOTAL DIRECT CEDEABLE
WRITTEN PREMIUMS AS USED IN THIS SECTION DO NOT
INCLUDE PREMIUMS ATTRIBUTABLE TO RISKS CEDED TO
THE REINSURANCE FACILITY HAVING ONE OR MORE
MERIT RATING PLAN POINTS; TO AMEND THE 1976 CODE
BY ADDING SECTION 56-10-275 SO AS TO PROVIDE THAT
ANY PERSON WHO OPERATES OR ALLOWS AN
UNINSURED MOTOR VEHICLE TO BE OPERATED SHALL
SUFFER THE IMMEDIATE IMPOUNDMENT OF THE
VEHICLE UNTIL HE POSTS LIABILITY INSURANCE IN THE
AMOUNT REQUIRED BY CHAPTER 77 OF TITLE 38 AND
PAYS ANY STORAGE AND IMPOUNDMENT FEE,
TOGETHER WITH ANY OTHER FINES OR FEES IMPOSED
FOR THE OPERATION OF AN UNINSURED MOTOR
VEHICLE; TO REPEAL SECTIONS 38-73-1410, RELATING TO
AUTOMOBILE INSURANCE AND THE PROVISION THAT
THE REFILING OF FINAL RATES OR PREMIUM CHARGES
PREVIOUSLY APPROVED IS NOT REQUIRED, AND
38-77-595, RELATING TO THE REINSURANCE FACILITY
AND THE CONDITIONS FOR THE DESIGNATION OF AN
OTHERWISE INELIGIBLE APPLICANT; AND TO REPEAL,
EFFECTIVE JULY 1, 2000, SECTIONS 38-77-600, RELATING
TO THE REINSURANCE FACILITY RECOUPMENT CHARGE,
38-77-605, RELATING TO THE REQUIREMENT THAT THE
REINSURANCE FACILITY RECOUPMENT CHARGE BE
DISPLAYED ON EVERY PREMIUM NOTICE OR BILL FOR
PRIVATE PASSENGER AUTOMOBILE INSURANCE,
38-77-610, RELATING TO THE AUTOMOBILE INSURANCE
LAW AND THE FILING OF RECOUPMENT CHARGES,
38-77-620, RELATING TO THE AUTOMOBILE INSURANCE
LAW AND THE INCLUSION OF RECOUPMENT CHARGES IN
CERTAIN RATES, AND 38-77-625, RELATING TO THE
PROVISION THAT IF AN INSURED IS INVOLVED IN A
MOTOR VEHICLE ACCIDENT WHERE HE IS NOT THE
AT-FAULT DRIVER, HIS REINSURANCE FACILITY
RECOUPMENT CHARGE MAY NOT BE INCREASED BY HIS
INSURER BECAUSE OF THIS OCCURRENCE.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Section 38-73-455 of the 1976 Code, as last
amended by Sections 783, 784, and 785 of Act 181 of 1993, is
further amended to read:
"Section 38-73-455. (A) An automobile insurer
shall file and offer two different rates for
automobile insurance, a base rate as defined in Section
38-73-457 and an objective standards rate which is twenty-five
percent above the base rate. Both of these rates are which
is subject to all surcharges or discounts, if any, applicable
under any approved merit rating plan, credit or discount plan
promulgated by the department or approved by the director or his
designee and subject to allocation and recoupment surcharges
provided for in Chapter 77. Additionally, an automobile insurer
shall offer the applicable rates approved for policies ceded to the
Reinsurance Facility.
Applicants, or a current policyholder, seeking automobile
insurance with an insurer must be written at the base rate, unless
one of the conditions or factors in subitems (1) through (8) of item
(A) is present.
(A) The named insured or any operator who is not excluded in
accordance with Section 38-77-340 and who resides in the same
household or customarily operates an automobile insured under the
same policy, individually:
(1) has obtained a policy of automobile insurance or
continuation thereof through material misrepresentation within the
preceding thirty-six months; or
(2) has had convictions for driving violations on three or
more separate occasions within the thirty-six months immediately
preceding the effective date of coverage as reflected by the motor
vehicle record of each insured driver as maintained by the Motor
Vehicle Division of the Department of Revenue and Taxation; or
(3) has had two or more "chargeable" accidents
within the thirty-six months immediately preceding the effective
date of coverage. A "chargeable" accident is defined as
one resulting in bodily injury to any person in excess of three
hundred dollars per person, death, or damage to the property of the
insured or other person in excess of seven hundred fifty dollars.
Accidents occurring under the circumstances enumerated below are
not considered chargeable.
(a) The automobile was lawfully parked. An automobile
rolling from a parked position is not considered as lawfully parked
but is considered as operated by the last operator.
(b) The applicant or other operator or owner was
reimbursed by or on behalf of a person responsible for the accident
or has a judgment against this person.
(c) The automobile of an applicant or other operator was
struck in the rear by another vehicle and the applicant or other
operator has not been convicted of a moving traffic violation in
connection with the accident.
(d) The operator of the other automobile involved in the
accident was convicted of a moving traffic violation and the
applicant or other operator was not convicted of a moving traffic
violation in connection therewith.
(e) An automobile operated by the applicant or other
operator is damaged as a result of contact with a "hit and
run" driver, if the applicant or other operator so reports the
accident to the proper authority within twenty-four hours or, if the
person is injured, as soon as the person is physically able to do so.
(f) Accidents involving damage by contact with animals or
fowl.
(g) Accidents involving physical damage, limited to and
caused by flying gravel, missiles, or falling objects.
(h) Accidents occurring as a result of the operation of any
automobile in response to an emergency if the operator at the time
of the accident was responding to a call of duty as a paid or
volunteer member of any police or fire department, first aid squad,
or any law enforcement agency. This exception does not include an
accident occurring after the emergency situation ceases or after the
private passenger motor vehicle ceases to be used in response to the
emergency; or
(4) has had one "chargeable" accident and two
convictions for driving violations, all occurring on separate
occasions, within the thirty-six months immediately preceding the
effective date of coverage as reflected by the motor vehicle record
of each insured driver as maintained by the Motor Vehicle Division
of the South Carolina Department of Revenue and Taxation; or
(5) has been convicted of or forfeited bail during the
thirty-six months immediately preceding the effective date of
coverage for operating a motor vehicle while in an intoxicated
condition or while under the influence of drugs; or
(6) has been convicted or forfeited bail during the thirty-six
months immediately preceding the effective date for:
(a) any felony involving the use of a motor vehicle;
(b) criminal negligence resulting in death, homicide, or
assault arising out of the operation of a motor vehicle;
(c) leaving the scene of an accident without stopping to
report;
(d) theft or unlawful taking of a motor vehicle;
(e) operating during a period of revocation or suspension
of registration or license;
(f) knowingly permitting an unlicensed person to drive;
(g) reckless driving;
(h) the making of material false statements in the
application for licenses or registration;
(i) impersonating an applicant for license or registration or
procuring a license or registration through impersonation, whether
for himself or another;
(j) filing of a false or fraudulent claim or knowingly
aiding or abetting another in the presentation of such a claim;
(k) failure to stop a motor vehicle when signaled by means
of a siren or flashing light by a law enforcement vehicle; or
(7) has for thirty or more consecutive days during the twelve
months immediately preceding the effective date of coverage,
owned or operated the automobile to be insured (or if newly
acquired, the automobile it replaces) without liability coverage in
violation of the laws of this State; or
(8) has used the insured automobile as follows or if the
insured automobile is:
(a) used in carrying passengers for hire or compensation,
except that the use of an automobile for a car pool must not be
considered use of an automobile for hire or compensation;
(b) used in the business of transportation of flammables or
explosives;
(c) used in illegal operation; or
(d) no longer principally used and garaged within the state,
but not to include students who are operating a motor vehicle
registered in this State while attending an institution located in
another state.
(B) In the event that one or more of the conditions or factors
prescribed in items (1) through (8) of subsection (A) exist, the
motor vehicle customarily operated by that individual must be
written at the objective standards rate.
(C) Member companies of an affiliated group of automobile
insurers may not utilize different filed rates for automobile
insurance coverages which they are mandated by law to write. For
the purpose of this section, an affiliated group of automobile
insurers includes a group of automobile insurers under common
ownership, management, or control. Those automobile insurers
designated contracted pursuant to Section
38-77-590(a), for automobile insurance risks written by them
through producers designated assigned by the
facility governing board pursuant to that section, shall utilize the
rates or premium charges by coverage filed and authorized for
use by the rating organization licensed by the director or his
designee pursuant to Article 11, Chapter 73 of this title, which has
the largest number of members or subscribers for automobile
insurance rates applicable for policies ceded to the
facility. However, those automobile insurers designated
contracted pursuant to Section 38-77-590(a) are not
required to use those same rates or premium charges described in
the preceding sentence for risks written by them through their
authorized agents not appointed pursuant to Section 38-77-590
on policies not ceded to the facility.
(D) An automobile insurance policy may be endorsed at
any time during the policy period to reflect the correct rate or
premium applicable by reason of the factors or conditions described
in subsection (A) which existed prior to the commencement of the
policy period in which the endorsement is made, regardless of
whether the factors or conditions were known or disclosed to the
insurer at the commencement of the policy period. However,
No policy may be endorsed during a policy period to reflect factors
or conditions occurring during that policy period. A policy may be
endorsed during a policy period to recognize the addition or
deletion of an operator or vehicle.
(E) For purposes of determining the applicable rates to be
charged an insured, an automobile insurer shall obtain and review
an applicant's a motor vehicle record for an
applicant or an existing policyholder, on renewal, and each operator
of an insured vehicle."
SECTION 2. Section 38-73-457 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-457. Notwithstanding Sections 38-73-920
and 38-73-1210, every automobile insurer and rating organization
shall, prior to October 1, 1987, file with the department a
base rate, which is defined as a rate by coverage calculated solely
upon the experience generated by the risk for each class and
territory retained by the insurer in its voluntary book of business
and which must not include experience generated by risks ceded or
assumed from the Reinsurance Facility. established
under Section 38-73-1030. An objective standards rate by coverage
must also be filed which is twenty-five percent above the base rate
previously described for each class and territory. The base rate
must be calculated by removing from the rate or premium charge,
then in effect for the automobile insurer, that portion of the rate or
premium charge attributable to the net gain or loss of the insurer as
a result of participation in the operating results of the facility as
required by Section 38-77-760. In determining the base rate and
objective standards rate, by coverage, the director or his designee,
in order that no extra premium revenue is generated by this section,
shall require that the insurer's average rate, by coverage, on
October 1, 1987, (computed as a weighted average of the base rate
and objective standards rate, by coverage, as determined by the
Commissioner), not exceed the insurer's average rate, by coverage,
prior to October 1, 1987, as determined by the director or his
designee. The provisions of the Administrative Procedures Act
apply to any appeal of a base rate or objective standards rate
brought thereunder before the Administrative Law Judge Division
as provided by law. The base rate or objective standards rate
approved by the director or his designee may be put into effect
under bond in a similar manner that a public utility may put a
proposed rate increase into effect under bond as provided by law.
No insurer may file a base rate for any class or territory which is
higher than the rate or premium charge, exclusive of that portion
required by Section 38-73-460, approved by the director or his
designee for use on October 1, 1987. As a result of this section, no
insured may receive an increase in rates for other than an increase
in coverage or due to the provisions of Section 38-77-280,
38-77-610, or 38-73-455, unless the insurer files additional rates in
accordance with this title.
The base rate and objective standards rate filed by each insurer of
automobile insurance are effective if they meet the requirements of
this section, on or after July 1, 1988, for all eligible applicants and
upon the renewal date, on or after July 1, 1988, for all eligible
existing policyholders. If the base rate and objective standards rate
filed by an automobile insurer do not meet the requirements of this
section, the director or his designee shall suspend the authority of
that insurer to write automobile insurance until the deficiencies are
corrected.
After July 1, 1988, No rate or premium charge, exclusive of
the facility recoupment charge approved or established pursuant to
Section 38-77-610 and allocation surcharges approved or
established under Section 38-77-530, may be approved for an
insurer of automobile insurance unless that rate or premium charge
is calculated in accordance with this section and meets the other
applicable requirements of this title pertaining to the approval of
rates or premium charges.
The Consumer Advocate, upon request to the director or his
designee, must be provided by him with a copy of any base rate
filed with the director or his designee along with any supporting
materials, documents, or studies utilized to support the filed base
rate. In addition, every automobile insurer and rating organization
shall promptly respond to requests for information and data
requested by the Consumer Advocate relating to the filed base rate.
The Consumer Advocate must be afforded an opportunity for a
hearing before the director or his designee on any filed base rate
before it takes effect that he believes does not meet the
requirements of this section. Final decisions of the director or his
designee regarding this hearing are subject to the provisions of the
State Administrative Procedures Act and may be appealed to the
Administrative Law Judge Division as provided by law.
Effective October 1, 1995, the director or his designee shall
disallow the further use of the objective standards rate previously
filed in accordance with this section; however, concurrently with the
above effective date the director or his designee shall modify the
uniform merit rating plan to the extent that surcharges are applied
as a percent of the base rate, not as a flat dollar amount,
incorporating into the surcharges the prior objective standards rate
surcharge such that the overall rate levels on applicable policy
premiums before and after the effective date are generally the same.
Upon the effective date of this section, nothing in this section
should be construed to require a rating organization, its members or
subscribers, or an individual insurer to immediately refile final rates
or premium charges previously approved by the director and his
designee and referred to as the base rate for automobile insurance
coverages. Members or subscribers of a rating organization or
individual insurers are authorized to continue to use those base rates
approved before the effective date of this section."
SECTION 3. Section 38-73-735 of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"Section 38-73-735. In addition to risk and territorial
classification plans promulgated or approved under Section
38-73-730, the department may promulgate plans to afford credits
or discounts to automobile insureds, or he may approve the credit
or discount plans filed with him by insurers of automobile
insurance. No automobile insurance credit or discount plan may be
promulgated or approved by the director or his designee unless:
(1) the criteria for determining eligibility for credits or discounts
under the plan are objective, clear, and unequivocal;
(2) the criteria are based upon factually or statistically supported
data; and
(3) the credits or discounts provided under the plan will be
afforded by the insurer on a nondiscriminatory basis to all insureds
who are eligible therefor. If an insurance credit or discount
plan, other than that promulgated by the director or his
designee, is given to an insured pursuant to this section, the
policy may not be ceded to the Reinsurance Facility in
accordance with the facility's plan of operation."
SECTION 4. Section 38-73-760(e) of the 1976 Code, as last
amended by Section 783 of Act 181 of 1993, is further amended to
read:
"(e) The director or his designee shall require all insurers
transacting automobile insurance business in this State to assess
surcharges and grant safe driver discounts of no less than twenty
percent. The safe driver discount shall not be included in the
rate or premium calculation for:
(1) any driver who has held a valid driver's license less than
two years; or
(2) any applicant for automobile insurance who cannot show
valid proof of twelve months prior, continuous automobile liability
insurance coverage on vehicles owned by the applicant at the date
of application. However, a lapse of coverage for five days or less
shall not cause the loss of the safe driver discount nor thirty days or
less without coverage on newly acquired vehicles."
SECTION 5. The 1976 Code is amended by adding:
"Section 38-73-780. (A) The state rating and statistical
division shall develop and file a loss component for private
passenger automobile insurance coverages based on the total
experience of all insurers in this State including risks ceded to the
facility. Due consideration must be given to actual loss experience
within this State for the most recent three-year period for which
such information is available; to prospective loss experience with
this State; and to all other relevant factors within this State;
provided, however, that countrywide loss experience and other
countrywide data may be considered only where credible South
Carolina experience or data is not available.
(B) The loss component developed under this section is
applicable to the risk and territorial classification plan promulgated
and approved by the director or his designee.
(C) The state rate and statistical division shall annually review
the loss component to determine if it is proper and supported by
statistical evidence and make appropriate filings for approval of
rates as required under this chapter."
SECTION 6. Section 38-73-1420 of the 1976 Code, as added by
Act 148 of 1989 and as last amended by Section 783 of Act 181 of
1993, is further amended to read:
"Section 38-73-1420.After June 30, 1989, The
Board of Governors of the South Carolina Reinsurance Facility
shall file an expense component as defined under Section
38-73-1400(2) for private passenger automobile insurance rate
or premium charges which must accurately reflect the actual
expenses of the South Carolina Reinsurance Facility without profit
and for use with after the rating organization with the
largest number of members or subscribers has filed a
the pure loss component for private passenger automobile
insurance coverages developed under Section 38-73-780
with the director or his designee. Upon the approval of
such component by the director or his designee, those
automobile insurers designated contracted pursuant
to Section 38-77-590(A), for risks written by them through
producers designated assigned pursuant to that same
section, and, subject to the provisions of Section 38-73-1425, all
insurers on all risks ceded to the facility, shall utilize
these the final rate or premium charges required
under Section 38-77-540. Automobile insurers
designated contracted pursuant to Section
38-77-590(A) are not required to use those same final rates or
premium charges for risks written through their agents not
appointed assigned pursuant to Section 38-77-590
on risks not ceded to the facility."
SECTION 7. Section 38-73-1425 of the 1976 Code, as added by
Act 113 of 1991, is amended to read:
"Section 38-73-1425. The final rate or premium charge
for a private passenger automobile insurance risk ceded to the
facility which does not qualify for the safe driver discount in
Section 38-73-760(e) is the final rate or premium charge
required by Section 38-73-1420 38-77-540 or the
final rate or premium charge approved for use by the insurer,
whichever is greater. However, the base rate for any private
passenger automobile insurance risk ceded to the facility by an
insurer shall not be less than the base rate which was in effect and
in use on November 1, 1994 by those automobile insurers
contracted pursuant to Section 38-77-590(a) for risks written by
them through producers designated pursuant to that same section.
(A) The establishing of a uniform rate for risks having no merit
rating plan points currently ceded to the facility by insurers having
company filed rates in effect on October 1, 1995 which are less
than the state uniform rate shall be accomplished within a two-year
period such that one-half of the current differential of the lower
company filed rate and the state uniform rate shall be added on
renewals effective on or after October 1, 1995, and on renewals
effective on or after October 1, 1996. Such risks shall be ceded at
the final rate or premium charge required by Section 38-77-540.
(B) On private passenger automobile insurance coverages ceded
to the facility, effective for the period beginning October 1, 1995
through September 30, 1996 the loss component portion of the state
uniform rate under Section 38-73-780 shall not be more than ten
percent greater than the loss component for private passenger
automobile insurance coverage filed with the director or his
designee by the Insurance Services Office (ISO). On private
passenger automobile insurance coverages ceded to the facility,
effective for the period beginning October 1, 1996 through
September 30, 1997 the loss component portion of the state uniform
rate under Section 38-73-780 shall not be more than fifteen percent
greater than the loss component for private passenger automobile
insurance coverage filed with the director or his designee by the
Insurance Services Office (ISO).
On private passenger automobile insurance coverages ceded to
the facility, effective for the period beginning October 1, 1997
through September 30, 1998 the loss component portion of the state
uniform rate under Section 38-73-780 shall not be more than twenty
percent greater than the loss component for private passenger
automobile insurance coverage filed with the director or his
designee by the Insurance Services Office (ISO). On private
passenger automobile insurance coverages ceded to the facility,
effective for the period beginning October 1, 1998 through
September 30, 1999 the loss component portion of the state uniform
rate under Section 38-73-780 shall not be more than twenty-five
percent greater than the loss component for private passenger
automobile insurance coverage filed with the director or his
designee by the Insurance Services Office (ISO). On private
passenger automobile insurance coverages ceded to the facility,
effective for the period beginning October 1, 1999 through
September 30, 2000 the loss component portion of the state uniform
rate under Section 38-73-780 shall not be more than thirty percent
greater than the loss component for private passenger automobile
insurance coverage filed with the director or his designee by the
Insurance Services Office (ISO).
(C) The establishment of the facility uniform rate as defined in
Chapter 77 and required under Section 38-77-540(b) shall be
accomplished by an annual increase, if any, of not more than five
percent at each successive policy renewal on applicable risks
effective on or after October 1, 1995."
SECTION 8. Section 38-77-10 of the 1976 Code, as last
amended by Section 801 of Act 181 of 1993, is further amended to
read:
"Section 38-77-10. In order to effect a complete reform
of automobile insurance and insurance practices in South Carolina,
the purposes of this chapter are:
(1) To provide that every automobile insurance risk which is
insurable on the basis of the criteria established in this chapter is
entitled to automobile insurance from the automobile insurer of the
applicant's choice on the basis of the same rates, policy forms,
claims service, and other services provided by the insurer to all
other applicants or insureds falling within the same
classification of risk and territory under the applicable risk and
territorial classification plan promulgated by the department or
the facility rate plans. so long as all these applicants or
insureds have satisfied the same objective standards as established
in Sections 38-77-280 and 38-73-455;
(2) To provide a Reinsurance Facility for automobile insurers in
which all automobile insurers must participate to the end that the
operating expenses and net profit or loss of the facility may be
shared equitably by all the insurers transacting automobile insurance
business in this State giving appropriate consideration to degrees of
utilization of the facility by the several insurers of automobile
insurance and to provide prohibitions or penalties in respect to
excessive utilization of the facility.
(3) To provide prohibitions and penalties in respect to unfairly
discriminatory or unfairly competitive practices having as their
purpose or effect evasion of the statutory mandate of coverage
provided in this chapter or imposing an undue or unfair burden
upon other automobile insurers through excessive utilization of the
facility.
(4) To provide medical, surgical, funeral, and disability
insurance benefits without regard to fault to be offered under
automobile insurance policies that provide bodily injury and
property damage liability insurance, or other security, for motor
vehicles registered in this State."
SECTION 9. Section 38-77-30 of the 1976 Code, as last
amended by Section 802 of Act 181 of 1993, is further amended by
adding:
"(15) `Cede' or `cession' means the act of transferring the
risk of loss from the individual insurer to all member insurers of
the South Carolina Reinsurance Facility through the operation of the
facility.
(16) `Clean risk subsidy' means the total annual amount assessed
to member insurers, collected by the insurer as an allocation
surcharge per insured vehicle, and paid to the facility in each fiscal
period to off-set the anticipated losses attributable to the facility's
experience with drivers of private passenger automobile risks
having no merit rating plan points.
(17) `State uniform rate' means the final rate or premium charge
established by adding the loss component developed under Section
38-73-780 to the expense component filed by the governing board
of the facility under Section 38-73-1420.
(18) `Facility uniform rate' means the state uniform rate after
application of an experience modification factor of no less than one
such that no operating loss or gain is attributable to the facility's
experience with drivers of private passenger automobile risks
having one or more merit rating plan points [Ex: state uniform rate
X 1.00; state uniform rate X 1.14; etc.]."
SECTION 10. Section 38-77-110(A) of the 1976 Code, as last
amended by Section 803 of Act 181 of 1993, is further amended to
read:
"(A) Automobile insurers other than insurers designated
and approved as specialized insurers by the director or his designee
may not refuse to write or renew automobile insurance policies for
individual private passenger automobiles or small commercial risks.
These policies may not be canceled except for reasons which had
they existed or been known when the policy was written would
have rendered the risk not an insurable risk. Every automobile
insurance risk constitutes an insurable risk unless the operator's
permit of the named insured has been revoked or suspended and is
at the time of application for insurance so revoked or
suspended. However, no insurer is required to write or renew
automobile insurance on any risk if there exists a valid and
enforceable outstanding judgment secured by an insurer, an agent,
or licensed premium service company on account of automobile
insurance premiums which the applicant or insured or any principal
operator who is a member of the named insured's household has
failed or refused to pay unless the applicant or insured pays in
advance the entire premium for the full term of the policy sought to
be issued or renewed or the annual premium, whichever is the
lesser. An insurer is not precluded from effecting cancellation of
an automobile insurance policy, either upon its own initiative or at
the instance of an agent or licensed premium service company,
because of the failure of any named insured or principal operator to
pay when due any automobile insurance premium or any installment
payment. However, notice of cancellation for nonpayment of
premium notifies the person to whom the notice is addressed that
the notice is void and ineffective if payment of the full amount of
the premium or premium indebtedness, whichever is the greater, is
made to the insurer, agent, or licensed premium service company
named in the notice by the otherwise effective date of cancellation.
This notice of cancellation is not considered ineffective for being
conditional, ambiguous, or indefinite."
SECTION 11. Section 38-77-140 of the 1976 Code is amended
to read:
"Section 38-77-140. No automobile insurance policy may
be issued or delivered in this State to the owner of a motor vehicle
or may be issued or delivered by an insurer licensed in this State
upon any motor vehicle then principally garaged or principally used
in this State, unless it contains a provision insuring the persons
defined as insured against loss from the liability imposed by law for
damages arising out of the ownership, maintenance, or use of these
motor vehicles within the United States or Canada, subject to limits
exclusive of interest and costs, with respect to each motor vehicle,
as follows: fifteen thousand dollars because of bodily injury to one
person in any one accident, and, subject to the limit for one person,
thirty thousand dollars because of bodily injury to two or more
persons in any one accident, and five fifteen
thousand dollars because of injury to or destruction of property of
others in any one accident. Nothing in this article prevents an
insurer from issuing, selling, or delivering a policy providing
liability coverage in excess of these requirements."
SECTION 12. Section 38-77-280(B) of the 1976 Code, as last
amended by Section 810 of Act 181 of 1993, is further amended to
read:
"(B) Notwithstanding subsection (A) and Sections
38-77-110 and 38-77-920, automobile insurers may refuse to
write automobile physical damage insurance coverage, including
automobile comprehensive physical damage, collision, fire, theft,
and combined additional coverage, for an applicant or existing
policyholder, on renewal, for a motor vehicle customarily operated
by an individual, either the named insured or another operator not
excluded in accordance with Section 38-77-340 and who resides in
the same household, where one or more of the conditions or factors
prescribed in Section 38-73-455 exist. In addition, automobile
insurers may refuse to write physical damage insurance coverage to
an applicant or existing policyholder, on renewal, who has collected
benefits provided under automobile insurance physical damage
coverage during the thirty-six months immediately preceding the
effective date of coverage, for two or more total fire losses or two
or more total theft losses. Automobile insurers may refuse to write
for private passenger automobiles physical damage insurance
coverage, including automobile comprehensive physical damage,
collision, fire, theft, and combined additional coverage, for an
applicant or existing policyholder, on renewal, for a motor vehicle
customarily operated by an individual, either the named insured or
another operator not excluded in accordance with Section 38-77-340
and who resides in the same household, to which does
not qualify for the safe driver discount in Section 38-73-760(e)
one or more merit rating plan points apply."
SECTION 13. The title of Article 5 of Chapter 77, Title 38 of
the 1976 Code is amended to read:
"Reinsurance Facility, Servicing Carriers,
and
Designated Producers"
SECTION 14. Section 38-77-530 of the 1976 Code, as last
amended by Section 818 of Act 181 of 1993, is further amended to
read:
"Section 38-77-530. (A) The plan of operation
of the facility is subject to the approval of the director or his
designee which may be granted only if the plan provides for
equitable apportionment of the operating expenses and profits or
losses among the members. The plan may, if the director or his
designee considers it feasible and equitable, make provision for
separate apportionments between private passenger automobile
insurance business and commercial automobile insurance business,
or, alternatively or in addition to that division, the plan may make
provision for separate apportionments between automobile liability
insurance business, including medical payments and uninsured
motorist insurance, and automobile physical damage insurance
business. Any such apportionments shall give consideration to a
comparison between the writings or car-year exposures of each
insurer of automobile insurance and the total writings or car-year
exposures of all automobile insurers or, in the case of any separate
apportionments approved by the director or his designee, a
comparison between the writings or car-year exposures of each
insurer within the applicable category of automobile insurance and
the writings or car-year exposures of all insurers within that
category.
In connection with his approval of the plan, the director or his
designee may require that the plan make provision for such
comparisons for a one-year period or for a longer period not to
exceed five years and may provide for weighing the experience so
as to attach a greater weight to the more recent experience.
In connection with the approval of the plan's provisions
respecting equitable apportionment of the operating expenses or
gains or losses of the facility, the director or his designee may
require that the plan make provision for a comparison between each
insurer's percentage of the aggregate written premiums or car-year
exposures respecting automobile insurance or any such category
thereof and the insurer's percentage of total cessions to the facility
of such insurance or category thereof so as to provide that the
insurer's portion of the operating expenses or gains or losses must
be the average of the two percentages; or the director or his
designee may approve or require any other similar or comparable
provision for the apportionment of the expenses or gains or losses
of the facility which relates insurers' shares to their respective
utilization of the facility.
(B) The plan shall provide that every member, upon any
assessment related to private passenger automobile risks, shall
collect that assessment for payment to the facility by way of a
surcharge on automobile insurance policies issued by the member.
Such surcharges shall be a percentage of premium adopted by the
governing board of the facility and approved by the director or his
designee;and the charges determined on the basis of the surcharge
shall be combined with and displayed as a part of the applicable
premium charges. If the amount collected during the period of
surcharge exceeds assessments paid by the member to the facility,
the member shall pay over the excess to the facility on a date
specified by the governing board. If the amount collected during the
period of surcharge is less than the assessments paid by the member
to the facility, the facility shall pay the difference to the member.
(C) The plan shall provide for two general classes of
assessments relating to the private passenger automobile reinsurance
operations of the facility:
(1) clean risk allocation which is the recovery of anticipated
losses attributable to the facility's experience with drivers having no
merit rating plan points hereafter referred to as "clean
risks", and
(2) effective January 1, 2001, loss allocation which is the
recovery of past facility operating losses attributable to the
experience with private passenger automobile risks after applying as
revenue the clean risk subsidy. The surcharge for each assessment,
the clean risk allocation and the loss allocation, shall be combined
where applicable and computed as one allocation fee per insured
vehicle during the period of surcharge. Except as provided in this
section, the amount of the allocation surcharge shall not be
considered or treated as a rate or premium and no ceding or claim
expense allowances shall be paid on such amount; however, the
surcharges provided for in this section shall include an amount
necessary to recover the amount of commission paid by each
member to agents in addition to the assessment to member insurers.
Such surcharges are subject to normal cancellation procedures. The
allocation surcharge percentage adopted by the governing board
shall not be applied to the facility recoupment charges required
under Section 38-77-600. The clean risk allocation surcharge
percentage shall be applicable to all private passenger automobile
risks written in this State by an insurer, including servicing carriers
contracted under Section 38-77-590 for business produced by
servicing agents assigned in accordance with that chapter, having
one or more merit rating plan points and private passenger
automobile risks having no merit rating plan points but which do
not qualify for the safe driver discount under Section 38-73-760(e)
and on any insurance policy or other financial instrument used to
satisfy a financial responsibility filing required to maintain a South
Carolina driver's license. The loss allocation surcharge percentage
shall apply to all private passenger automobile risks on policies
issued by a member insurer. The clean risk and loss allocation
surcharge percentages applicable in this section shall be adjusted by
an insurer such that the insurer collects the same dollar amount as
would have been collected had the surcharge percentage established
by the governing board been applied to the premium for the risk
utilizing the state uniform rate as defined in this chapter.
(D) On November 30, 1995 and before December first of each
year thereafter, the governing board of the facility shall determine
the clean risk allocation surcharge for use in the next calendar year
period from loss experience and expense data of the prior fiscal
year; however, the total annual amount assessed to member insurers
to off-set the anticipated losses of `clean risks' must not be more
than ten percent of the combined total for incurred losses, loss
adjustment expenses, commissions, and all other expenses of the
facility related to private passenger automobile risks during the
previous fiscal year. On November 30, 2000 and before December
first of each year thereafter, the governing board of the facility shall
calculate the loss allocation surcharge for use in the next calendar
year period from the actual operating loss, if any, attributable to all
ceded private passenger automobile risks after applying as revenue
the clean risk subsidy in the prior fiscal year.
(E) The plan of operation shall provide that all investment
income from the premium on business reinsured by the facility shall
be retained by or paid over to the facility. In determining the cost
of operation of the facility, all investment income shall be taken
into consideration. Any net operating gains resulting from the
operation of the facility must be retained by the facility and used to
offset future operating losses.
(F) Except as provided for in this section, an insurer will
provide the same type of service to ceded business that it provides
for its voluntary market. The facility shall require each member to
adjust losses for ceded business fairly and efficiently in the same
manner as voluntary business losses are adjusted and to effect
settlement where settlement is appropriate.
(G) It shall be the responsibility of the agent to write the
coverage applied for at what is believed to be the appropriate rate
level. If coverage is written at the cedeable rate levels and the
company elects not to cede, the policy shall be rated at the
voluntary rate level. Coverage written at the voluntary rate level
which is not acceptable to the company must either be placed with
another company or rated at the cedeable rate level by the agent.
When an insurer cedes a policy or renewal thereof to the facility
and the facility premium for such policy is higher than the
voluntary market premium normally charged for such policy if
retained by the insurer and the policyholder cancels the policy
within forty-five days of the effective date of such ceded policy
then the earned premium shall be based on the voluntary market
premium and calculated on the pro rata basis.
(H) The plan of operation shall allow for annual and semiannual
policy terms. No insurer shall cede an automobile risk to the facility
on a policy having an installment payment plan offered by the
insurer if such plan provides for other than annual, semiannual, or
quarterly installments. Nothing in this section shall prohibit the
arrangement of installment financing by the agent or a licensed
premium service company in accordance with the applicable
sections of this title."
SECTION 15. The 1976 Code is amended by adding:
"Section 38-77-535. (A) During the period beginning on
January 1, 1996, through December 31, 1996, only five percent of
the clean risk allocation shall be assessed and collected by member
insurers.
(B) During the period beginning on January 1, 1997, through
December 31, 1997, only twenty percent of the clean risk allocation
shall be assessed and collected by member insurers.
(C) During the period beginning on January 1, 1998, through
December 31, 1998, only thirty percent of the clean risk allocation
shall be assessed and collected by member insurers.
(D) During the period beginning on January 1, 1999, through
December 31, 1999, only fifty percent of the clean risk allocation
shall be assessed and collected by member insurers.
(E) Beginning on January 1, 2000, one hundred percent of the
clean risk allocation shall be assessed and collected by member
insurers."
SECTION 16. The title of Section 38-77-540 of the 1976 Code is
amended to read:
"Duties of Ceding Insurer
Facility Rate Plans".
SECTION 17. Section 38-77-540 of the 1976 Code is amended
to read:
"Section 38-77-540. The ceding insurer shall transfer or
credit to the Facility on any policy of automobile insurance
reinsured by the Facility the pure loss component of its rate or
premium charge together with the profit and contingency
component of the rate or premium charge as determined under its
rating plan or system as filed with the Department. The ceding
insurer shall retain as and for its ceding commission the allocated
loss adjustment expense component as well as the underwriting and
administrative expense components of the rate or premium charge
under ceding insurer's rating plan or system as filed with the
Department. However, no ceding insurer may include in the
agents' commissions component of its underwriting expenses any
amount greater than it has actually paid its agent as commission on
the reinsured risk. The facility shall accept cessions on a
policy of private passenger automobile insurance at the option of an
insurer but only at the rate or premium charge as determined under
the rating plans established by the governing board and approved by
the director or his designee, subject, however, to Section 38-77-950
regarding reasonable utilization of the facility by member
companies. The rate plans for the facility are subject to the
director's or his designee's approval which may be granted only if
the plan is consistent with and provides for the following:
(A) The rate or premium charge for drivers of private
passenger automobiles subject to the merit rating plan who have no
merit rating plan points shall be the state uniform rate as defined in
this chapter.
(B) The rate or premium charge for drivers of private passenger
automobiles subject to the merit rating plan who have one or more
merit rating plan points shall be the facility uniform rate as defined
in this chapter.
(C) The rate plans of the facility shall use the applicable
risk and territorial classification plan promulgated by the director or
his designee including merit rating plan surcharges and discounts as
provided for in section 38-73-760(e), and all rates or premium
charges shall likewise be subject to allocation and recoupment
surcharges as provided for in this chapter.
(D) The ceding insurer shall transfer or credit to the facility on a
policy of automobile insurance reinsured by the facility the pure
loss component of the applicable uniform rate together with the
contingent component of such rate. The ceding insurer shall retain
as and for its ceding commission the allocated loss adjustment
expense component as well as the underwriting and administrative
expense components of the applicable uniform rate. However, no
ceding insurer may include in the agents' commissions component
of its underwriting expenses any amount greater than it has actually
paid its agent as commission on the reinsured risk."
SECTION 18. Section 38-77-580 of the 1976 Code, as last
amended by Section 820 of Act 181 of 1993, is further amended to
read:
"Section 38-77-580. The operations and affairs of the
facility are under the direction and control of a governing board of
nineteen persons of whom four three must be
residents of South Carolina appointed by the Governor of South
Carolina to represent consumers. The director shall appoint eight
persons to represent the insurance industry; in appointing these
persons, the director shall select two from a list of not less than five
nominated by the American Insurance Association from the officers
or employees of insurers licensed in South Carolina and which are
members or subscribers of that organization; he shall select two
from a list of not less than five persons nominated by the American
Mutual Insurance Alliance from the officers or employees of
insurers licensed in South Carolina and which are members or
subscribers of that organization; he shall select two from a list of
not less than five persons nominated by the National Association of
Independent Insurers from the officers or employees of insurers
licensed in South Carolina and which are members or subscribers of
that organization; he shall select two persons, one of whom must be
an officer or employee of a stock insurer licensed in South Carolina
and not a member or subscriber of any of these organizations, and
one of whom must be an officer or employee of a nonstock insurer
licensed in South Carolina and not a member or subscriber of any
of these organizations; however, of the eight persons appointed to
represent the insurance industry, not less than five must be residents
of South Carolina and those who are not residents of South
Carolina must have job responsibilities that include the supervision
over South Carolina operations; not less than two must be officers
or employees of insurers licensed to transact automobile insurance
in South Carolina and domiciled therein. The director shall appoint
four six persons to represent producers, all of whom
must be residents of South Carolina; he shall select two such
persons from a list of not less than five nominated by the stock
agents' association Independent Insurance Agents of South
Carolina, Inc., and two from a list of not less than five persons
nominated by the mutual agents' association Professional
Insurance Agents of South Carolina, Inc., and two from a list of not
less than five persons nominated by the South Carolina Association
of Auto Insurance Agents, Inc. The director shall appoint
two persons one additional person to represent
the designated agents, one of whom who must be an
officer of a premium service finance company and the other of
whom must be a designated agent and both of whom must be
residents a resident of South Carolina. In addition the
Consumer Advocate is an ex officio member of the governing board
of the Reinsurance Facility. No person who is associated with any
business within the meaning of Section 8-13-20, which is either
subject to regulation by the Department of Insurance or which
provides goods or services to the facility for compensation, is
eligible for appointment to the board to represent consumers, except
that any person serving on the board representing consumers on the
effective date of this provision who would otherwise be disqualified
from serving based on this provision may continue to serve for the
remainder of his current term.
The director is chairman of the board, ex officio, but has no vote
except in the case of a tie. The director, or his designated
representative, shall preside over all meetings which must be held
not less than quarterly in South Carolina at the times and places the
director designates. However, upon the filing with the director of a
request for a meeting signed by not fewer than five members of the
board and specifying the subjects to be discussed at the proposed
meeting, the director shall call a special meeting of the board to be
held not less than fifteen nor more than thirty days after receipt of
the request. Notice, in writing, of the special meeting must be
provided members of the board.
Members of the board shall serve one year or until their
successors are appointed and have qualified.
Amendment of the plan of operation may be made only at the
annual meeting of the board or at a special meeting called by the
director for that purpose and so specified in the notice of meeting.
Amendments of the plan require the affirmative vote of two-thirds
of all the board members and are subject to the approval of the
director or his designee. The director or his designee may approve
amendments only if they are consistent with the purposes of this
chapter. If the consumer-representative members of the board
unanimously dissent from a proposed amendment and specify their
reasons for dissent in writing, the director or his designee may not
approve the amendment until after a public hearing addressed to the
reasons for the dissent.
The director may make provision for voting by proxy at
meetings.
The director or his designee, through the department, may
propose to the board any amendment to or modification of the plan
that the director or his designee considers to be necessary to render
the plan reasonable or consistent with the purposes of this chapter,
specifying in writing the reasons for any proposed amendment or
modification. In the event that the board fails to adopt his proposed
amendment or modification, the director or his designee may, after
notice and public hearing addressed to the reasons for the proposed
amendment or modification, promulgate the amendment or
modification considered necessary to render the plan reasonable or
consistent with the purposes of this chapter."
SECTION 19. Section 38-77-585 of the 1976 Code, as added by
Act 557 of 1990, is amended to read:
"Section 38-77-585. Any insurer designated
contracted pursuant to Section 38-77-590(a) is entitled to
appoint an officer or employee to the governing board of the
Reinsurance Facility if not otherwise represented on the governing
board pursuant to Section 38-77-580. Any member of the
governing board representing an insurer so designated
contracted must abstain from casting a vote on any matter
which would have a material effect on the operations of that insurer
as it relates to the affairs of the insurer acting as a
designated contracted insurer for the Reinsurance
Facility."
SECTION 20. The title of Section 38-77-590 of the 1976 Code is
amended to read:
"Designated Servicing Carriers and
Producers".
SECTION 21. Section 38-77-590 of the 1976 Code, as last
amended by Sections 821-825 of Act 181 of 1993, is further
amended to read:
"Section 38-77-590. (a) Not more than six months
after July 9, 1974, or at an earlier time as the director or his
designee considers necessary by reason of complaints regarding
want of access to automobile insurance in particular areas or want
of outlets for producers, the director or his designee shall survey the
various areas of the State to ascertain if sufficient marketing outlets
exist in all areas or are available to all producers. Upon a finding
by the director or his designee that insufficient marketing outlets
exist in particular areas or that certain producers have been deprived
of a market for risks previously serviced by them, the director or
his designee may, after consultation with the facility, designate one
or more insurers to service the areas through agents appointed by
them or may designate the producers as the agents of any insurer.
The arrangements shall include provision for one hundred percent
quota share reinsurance through the facility of any automobile
insurance policy marketed through the arrangements, at the option
of the insurer, and the reinsurance is not subject to the statutory
provisions or regulations regarding excessive utilization of the
facility The director or his designee, after consultation with
the governing board of the Reinsurance Facility, shall direct the
governing board to contract with one or more insurers meeting
eligibility requirements promulgated by the governing board to act
as servicing carriers for the writing of automobile insurance through
producers assigned to the servicing carrier by the governing board.
The contract shall include provisions for one hundred percent quota
share reinsurance through the facility of any automobile insurance
policy ceded to the facility. The governing board may establish
reasonable nondiscriminatory standards which all servicing carriers
must meet for contract renewal. The servicing carriers shall not be
subject to the statutory provisions or regulations regarding excessive
utilization of the Reinsurance Facility for policies produced by its
assigned servicing agents. The servicing carrier shall cede the risk
on every policy of automobile insurance produced by its assigned
servicing agents for the Reinsurance Facility.
(b) After the effective date of this section, those producers
previously designated by the director or his designee may continue
to serve in that capacity under the jurisdiction and control of the
governing board of the facility, except that After October 1,
1995, producers previously designated by the director or his
designee or the governing board may continue to serve in the
capacity of a servicing agent for the Reinsurance Facility and shall
not be required to requalify or reapply for assignment under the
provisions of subsection (c). Producers assigned to a servicing
carrier in accordance with this section and producers previously
designated to a servicing carrier by the director or his designee or
the governing board of the Reinsurance Facility must remain
assigned to that servicing carrier until and unless, after October 1,
1997, the producer's written request to change the assignment is
received by the governing board of the Reinsurance Facility or until
the assignment is transferred to another carrier by the governing
board upon nonrenewal or termination of that servicing carrier's
contract. Any change in the rate of commissions allowed
designated the producers is subject to the approval
of the director or his designee.
(c) A producer may be designated by apply to
the governing board of the Facility upon application for
designation and is eligible for designation for assignment to
a servicing carrier and is eligible for assignment upon a
finding by the governing board that the applicant meets the
following qualifications:
(1) the applicant has been, for ten continuous years, a
licensed resident property and casualty insurance agent and is at
the time of application an agency owner or principal
associated with an agency in South Carolina which has been
actively in business for five years with authority from one or
more licensed insurers to write liability and physical damage
insurance on private passenger automobiles; and
(2) at the time of application the applicant is servicing and
owns the renewals on South Carolina private passenger and
commercial automobile insurance business, the net premiums on
which exceeded seventy-five one hundred thousand
dollars of potential cedeable automobile insurance during any one
of the previous five calendar years preceding the application;
and
(3) neither the applicant, nor any employee of the
applicant or the applicant's corporate agency, nor any partner or
shareholder in any related insurance agency, related premium
service company, or related other business, has any direct or
indirect connection with any voluntary market outlet for the purpose
of writing any type of automobile insurance in this State except for
motorcycle insurance and types not cedeable to the facility;
(4) the applicant has not contributed to his termination
as agent by any insurer during the previous five calendar
years because of any illegal breach of agency agreement or
other related, improper, or unethical conduct; and
(5)(4) the books, records, and accounts of
the insurance business of the applicant have been audited at the
expense of the applicant and found by the governing board to be
indicative of a financially sound operation.
(d) Prior to designation Before the assignment
as a producer, the applicant shall furnish at his expense a bond in
an amount of not less than fifty thousand dollars for the faithful
performance of the duties as a producer, executed by the applicant
as principal and a corporate surety licensed to do business in this
State as surety, and shall also have effective errors and omissions
insurance by an insurer licensed to do business in this State, with
the bond and errors and omissions insurance being subject to
approval by the governing board.
(e) The governing board shall assign a specific location to
each producer designated. The governing board shall determine
from the director or his designee the locations assigned by him to
those producers whom the director or his designee has designated.
Designated producers may not open or maintain any other locations
without the written authorization of the governing board; provided,
however, that an applicant maintaining multiple offices on June 4,
1987, is entitled to maintain two locations as a designated agent
which he owned and operated at that time and through which
premiums in at least the amount of seventy-five thousand dollars
were written. The governing board shall terminate the designation,
and the director or his designee shall revoke all agents' licenses of
any producer who does not comply with this requirement upon
demand by the governing board. Upon termination, the producer's
expirations on designated business become the property of the
facility A producer assigned to a servicing carrier may not
open or maintain more than one location at which the solicitation or
transaction of any automobile insurance business is conducted and
may not change such location without the written authorization of
the governing board. The governing board shall terminate the
assignment of any servicing agent who does not comply with this
requirement upon demand by the governing board. Applicants
maintaining multiple offices on June 4, 1987, are entitled to
maintain two locations as a producer which the agent owned and
operated at that time and through which automobile insurance
premiums in at least the amount of seventy-five thousand dollars
were written by the agent at each of the two locations.
(f) The designation of a producer by the director or his
designee or the governing board is transferable to a spouse, child,
parent, brother, or sister of the producer upon the designated
producer's retirement, incapacity, or death. The duties of a
designated producer may be performed by one or more qualified
employees of the producer or the producer's corporate agency
The assignment of a producer to a servicing carrier by the
governing board is transferable to a spouse, child, parent, brother,
or sister of the producer upon the producer's retirement, incapacity,
or death. The assignment at any time may, at the election of the
producer by written notice to the governing board, be irrevocably
transferred to a corporation authorized to transact business in South
Carolina by the Secretary of State and licensed by the insurance
director or his designee as an insurance agency. The duties of an
individual or corporate producer may be performed by one or more
qualified employees of the producer.
(g) Neither a designated producer, nor any employee of a
designated producer or the producer's corporate agency, nor any
partner or shareholder in any related insurance agency, related
premium service company, or related other business, may have any
direct or indirect connection with any voluntary market outlet for
the purpose of writing any type of automobile insurance in this
State except for motorcycle insurance and types not cedable to the
facility. The governing board shall terminate the designation of any
producer, and the director or his designee shall revoke all licenses
of the producer and of any other insurance agent and premium
service company knowingly involved in this connection. Upon
termination, the producer's expirations on designated business
become the property of the facility.
(h) A designated servicing carrier who
fails a claims audit shall have no new designated producer
servicing agent assignments until the time it passes a
re-audit within a reasonable time prescribed by the governing board.
If this carrier fails two claims audits, including a re-audit, within
any three-year period that carrier is disqualified for renewal of its
contract with the facility upon expiration of its existing contract.
(h) The governing board of the Reinsurance Facility shall
not contract with an insurer to act as a servicing carrier solely for
the insurer's own authorized and voluntarily contracted agents.
Servicing carriers shall accept assignments of servicing agents on an
equitable, nondiscriminatory basis promulgated by the governing
board. An insurer having voluntary contracts with one or more
servicing agents to write potentially cedeable automobile insurance
shall not be subject to the statutory provisions or regulations
regarding excessive utilization of the Reinsurance Facility for
policies produced by such servicing agents. An insurer shall not at
any time nor in any manner require, coerce or provide incentive for
a servicing agent to make a new offer of coverage and application
for insurance through the servicing carrier to which the servicing
agent is assigned pursuant to this section in order to replace or
supersede an existing policy or renewal offering of the insurer.
(i) Upon the change of assignment of a producer to another
servicing carrier, the producer's former servicing carrier shall not be
subject to the requirements of Sections 38-75-740 and 38-77-120
for the existing policies of that producer which policies shall expire
at the policy renewal dates beginning one hundred twenty days
from the receipt of the notice of the change of assignment by the
former carrier from the governing board of the reinsurance facility.
The former servicing carrier shall give written notice to each such
policyholder not less than thirty days before the policy expiration
date stating:
(1) that the policy will expire on the policy expiration date
and that coverage will not be continued by the former servicing
carrier after that date; and
(2) that a renewal policy will be offered to the policyholder
by the new servicing carrier effective at the expiration date and
time of the existing policy; and
(3) the name, address, and phone number of the producer.
The former servicing carrier shall provide in a timely manner
current individual policy information sufficient to allow the new
servicing carrier to issue renewal policies replacing the expiring
policies of the producer's transferred business with like coverages
and premiums. However, the original application for insurance and
endorsements on expiring policies of the producer's transferred
business shall be applicable to the renewal policy issued by the new
servicing carrier and may take precedence over the information
otherwise provided to the new servicing carrier. The producer's
existing policyholders shall not be required to execute a new
application for insurance. As a condition of acceptance of a
producer's change of assignment the new servicing carrier must
agree to compensate the former servicing carrier in a manner and
amount determined by the governing board to reimburse the former
servicing carrier costs to be incurred by its transfer of information
and documents to the new servicing carrier based upon the
producer's volume of business. Nothing in this section shall be
construed to in any way change, assign, or terminate the property
rights held by the producer which pertain to the producer's
ownership of policy expirations."
SECTION 22. Section 38-77-600 of the 1976 Code, as last
amended by Section 826 of Act 181 of 1993, is further amended to
read:
"Section 38-77-600. The rate or premium charged by
insurers of private passenger automobile insurance must include a
facility recoupment charge, which must be added to the appropriate
base rate or objective standards rate prescribed in Sections
38-73-455 and 38-73-457. The operating losses of the facility for a
twelve-month period must be recouped in the subsequent
twelve-month period.
(1) Prior to Before December first of each year,
the governing board of the facility shall calculate the recoupment
amount, by coverage, by dividing the net facility operating loss,
adjusted to reflect prudently incurred expenses, consistent with the
provisions of Section 38-73-465, and the time value of money, by
mandated coverage for the preceding facility accounting year, by
the total number of earned car years in South Carolina, by
coverage, for the same period of time. Until July 1, 1996,
.386 multiplied by the recoupment is to be borne by risks having
zero surcharge points under the Uniform Merit Plan promulgated by
the department. The remainder of the recoupment (.614 multiplied
by the recoupment) represents R in the formula, P(1)X + 2P(2)X +
3P(3)X + 4P(4)X + 5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X
+ 10P(1)+I0X = R. Effective for the recoupment period
beginning July 1, 1996 through June 30, 1997, .55 multiplied by the
recoupment is to be borne by risks having zero surcharge points
under the uniform merit plan promulgated by the director or his
designee. The remainder of the recoupment (.45 multiplied by the
recoupment) represents R in the formula, P(1)X + 2P(2)X + 3P(3)X
+ 4P(4)X + 5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X +
10P(10)X = R. Effective for the recoupment period beginning July
1, 1997 through June 30, 1998, .63 multiplied by the recoupment is
to be borne by risks having zero surcharge points under the uniform
merit plan promulgated by the director or his designee. The
remainder of the recoupment (.37 multiplied by the recoupment)
represents R in the formula, P(1)X + 2P(2)X + 3P(3)X + 4P(4)X +
5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X + 9P(9)X + 10P(10)X = R.
Effective for the recoupment period beginning July 1, 1998 through
June 30, 1999, .71 multiplied by the recoupment is to be borne by
risks having zero surcharge points under the uniform merit plan
promulgated by the director or his designee. The remainder of the
recoupment (.29 multiplied by the recoupment) represents R in the
formula, P(1)X + 2P(2)X + 3P(3)X + 4P(4)X + 5P(5)X + 6P(6)X +
7P(7)X + 8P(8)X + 9P(9)X + 10P(10)X = R. Effective for the
recoupment period beginning July 1, 1999 through June 30, 2000,
.80 multiplied by the recoupment is to be borne by risks having
zero surcharge points under the uniform merit plan promulgated by
the director or his designee. The remainder of the recoupment (.20
multiplied by the recoupment) represents R in the formula, P(1)X +
2P(2)X + 3P(3)X + 4P(4)X + 5P(5)X + 6P(6)X + 7P(7)X + 8P(8)X
+ 9P(9)X + 10P(10)X = R. In this formula to be utilized in
determining the facility recoupment charge:
(a) P(1) is the percentage of risks which have one surcharge
point under the Uniform Merit Rating Plan;
(b) P(2) is the percentage of risks which have two surcharge
points under the Uniform Merit Rating Plan;
(c) P(3) is the percentage of risks which are subject to a
surcharge of three points under the Uniform Merit Rating Plan;
(d) P(4) is the percentage of risks which are subject to a
surcharge of four points under the Uniform Merit Rating Plan;
(e) P(5) is the percentage of risks subject to a surcharge of
five points under the Uniform Merit Rating Plan;
(f) P(6) is the percentage of risks subject to a surcharge of
six points under the Uniform Merit Rating Plan;
(g) P(7) is the percentage of risks subject to a surcharge of
seven points under the Uniform Merit Rating Plan;
(h) P(8) is the percentage of risks subject to a surcharge of
eight points under the Uniform Merit Rating Plan;
(i) P(9) is the percentage of risks subject to a surcharge of
nine points under the Uniform Merit Rating Plan;
(j) P(1)+I0 or more is the percentage of risks subject to a
surcharge of ten or more points under the Uniform Merit Rating
Plan;
(k) X is the dollar amount by coverage, to be charged all
risks having one surcharge point under the Uniform Merit Rating
Plan promulgated by the department. This dollar amount, by
coverage, is the facility recoupment charge to be added to the base
rate or objective standards rate prescribed in Sections
38-73-455 and 38-73-457 for all risks which have one surcharge
point.
(2) The facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which
have one surcharge point under the Uniform Merit Rating Plan is
calculated by multiplying X by a factor of one.
(3) The facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which
have two surcharge points under the Uniform Merit Rating Plan is
calculated by multiplying X by a factor of two.
(4) The facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which
are subject to a surcharge of three points under the Uniform Merit
Rating Plan is calculated by multiplying X by a factor of three.
(5) The facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which
are subject to a surcharge of four points under the Uniform Merit
Rating Plan is calculated by multiplying X by a factor of four.
(6) The facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which
are subject to a surcharge of five points under the Uniform Merit
Rating Plan is calculated by multiplying X by a factor of five.
(7) The facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which
are subject to a surcharge of six points under the Uniform Merit
Rating Plan is calculated by multiplying X by a factor of six.
(8) The facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which
are subject to a surcharge of seven points under the Uniform Merit
Rating Plan is calculated by multiplying X by a factor of seven.
(9) The facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which
are subject to a surcharge of eight points under the Uniform Merit
Rating Plan is calculated by multiplying X by a factor of eight.
(10) The facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which
are subject to a surcharge of nine points under the Uniform Merit
Rating Plan is calculated by multiplying X by a factor of nine.
(11) The facility recoupment charge by coverage to be added to
the base rate or objective standards rate for all risks which
are subject to a surcharge of ten or more points under the Uniform
Merit Rating Plan is calculated by multiplying X by a factor of ten.
(12) In determining the number of surcharge points a risk has for
the purposes of this section, no surcharge points assigned under the
Uniform Merit Rating Plan because the principal operator of the
automobile has not been licensed in any state for at least one year
immediately preceding the writing of the risk or as a result of a
failure of any motor vehicle equipment requirement may be
considered.
(13) This section applies to all private passenger automobile
insurance policies issued or renewed after June 30, 1989. However,
insurers unable to comply with the provisions of this section and
renewal provisions required by law may comply with this section
at any time after June 30, 1989, but in no event later than October
1, 1989."
SECTION 23. Section 38-77-620 of the 1976 Code, as last
amended by Act 148 of 1989, is further amended to read:
"Section 38-77-620. The facility recoupment charges
approved or established pursuant to Section 38-77-610 must be
added to the approved base rate and objective standards rate
in effect for each automobile insurer. The combined rate or
premium charge is effective on July first of each year and the
recoupment charges must remain constant until July first of the
following year. The base rate and objective standards rate
may change in accordance with Section 38-73-457 and the other
applicable requirements of this title pertaining to the approval of
rates or premium charges. Facility recoupment charges must be
considered in accordance with:
(1) Any recoupment charge paid by policyholders must be
considered premium for the purpose of calculating premium taxes
and commissions and is subject to normal policy cancellation
procedures.
(2) Any net operating gains resulting from the operation of the
facility must be retained by the facility, and the gains and any
investment income derived from the gains must be used to offset
future operating losses.
(3) The total funds recouped by all insurers less commission
and premium tax expenses and time value of money considerations
must be paid to the Reinsurance Facility in accordance with the
plan of operation. The governing board shall redistribute the funds
to the insurers based upon each insurer's share of the Reinsurance
Facility losses. Recoupment must be used solely for the purpose of
recovering past facility operating deficits. The plan of operation
must provide that the amount ultimately received by an individual
company is not more than the company's share of the Reinsurance
Facility losses, plus the time value of money.
(4) In the making and approval of rates for small commercial
automobile risks, as defined in Section 38-77-30, consideration
must be given to the net gains or losses incurred by insurers as a
result of participation in the operating results and actual, prudently
incurred expenses, respectively, of the facility."
SECTION 24. Section 38-77-910 of the 1976 Code, as last
amended by Section 828 of Act 181 of 1993, is further amended to
read:
"Section 38-77-910. It is an act of unlawful discrimination
for an automobile insurer to make any distinction between
automobile insurance policyholders or applicants for automobile
insurance with respect to coverage, rates, claims, or other services
except as the distinctions are provided for in the rating plans for the
classification of risks and territories promulgated by the department
and the facility rate plans."
SECTION 25. Section 38-77-940 of the 1976 Code is amended
to read:
"Section 38-77-940. No insurer of automobile insurance
shall directly or indirectly by offer or promise of reward or
imposition or threat of penalty or through any artifice or device
whatsoever, confer any benefit upon any agent or impose any
detriment upon any such agent for the purpose of avoiding any
class or type of automobile insurance risk which the insurer
considers it necessary to reinsure in the facility; nor shall any offer
or promise of reward or imposition or threat of penalty in
connection with any other line or type of insurance be so tied to
automobile insurance as to have a tendency to induce the agent to
avoid any such class or type of automobile insurance risk; nor
shall any insurer of automobile insurance provide to agents, directly
or indirectly, orally or in writing, any listing of classes or types of
automobile insurance risks which it considers necessary to reinsure
in the Facility; nor shall any insurer of automobile insurance
terminate its insurance business with any one agent over the writing
of certain classes or types of automobile insurance risks without
also pulling out of the entire State or terminating its similar
insurance business with all other agents in the State at the same
time for a period of time of at least 365 days, except that if the
insurer reinstates the agent within thirty days of the determination
that the termination was unlawful, then this provision shall not
apply; nor shall any insurer of automobile insurance do anything
unfair, or unfairly fail to do anything, which has the effect of, or
which results in, causing any ceded insurance business to have a
detrimental effect on any incentive bonuses paid by the insurer to
agents. Any act in violation of this section constitutes an act of
unlawful discrimination and unfair competition which, if wilful,
shall result in the suspension or revocation of the insurer's
certificate of authority for not less than twelve months. Any
agreement made in violation of this section shall be void.
Nothing in this section may be considered to preclude or impair
agreements between insurers and their agents or some of their
agents to pay contingency commissions or a profit sharing bonus
based upon the quality of business; nor shall the insurers, in any
manner, use that business placed in the facility when determining
the quality bonus; nor may it be considered to preclude an
agreement between any agent and an insurer of automobile
insurance to exclude from any profit sharing or contingency
arrangement automobile insurance business coming unsolicited to
the agent and written by him solely because of the mandate of
coverage provided in this chapter.
No insurer of automobile insurance shall cancel its representation
by an agent primarily because of the volume of automobile
insurance placed with it by the agent on account of the statutory
mandate of coverage nor because of the amount of the agent's
automobile insurance business which the insurer has considered it
necessary to reinsure in the facility."
SECTION 26. Section 38-77-950 of the 1976 Code, as last
amended by Act 104 of 1993, and by Section 828 of Act 181 of
1993, is further amended to read:
"Section 38-77-950. It is the intent of this chapter that the
facility must not be excessively nor unreasonably utilized by
automobile insurers for unfairly competitive purposes or for
purposes of unfairly discriminating against certain classes or types
of automobile insurance risks having the same or similar objective
risk characteristics as other risks in the same class under the rating
plan for the classification of risks promulgated by the department,
nor for the purpose of discriminating against the risks or risks in
certain rating territories. The director or his designee shall prohibit
unreasonable or excessive utilization of the facility. A prima facie
case of excessive or unreasonable utilization is established upon a
showing that an automobile insurance insurer or a group of insurers
under the same management has ceded or is about to cede more
than thirty-five percent of total direct cedeable written premiums on
South Carolina automobile insurance as reported in the most
recently filed annual statement of the insurer or group. Upon the
written request of the policyholder, insurance companies doing
business in this State shall give written notice to the policyholder
informing him whether or not he and a driver under the policy is in
the facility. Insurers shall give written notice to the policyholder of
a risk ceded to the facility which does not qualify for the safe
driver discount in Section 38-73-760(e).
Total direct cedeable written premiums as used in this section do
not include premiums attributable to risks ceded to the facility
that do not qualify for the safe driver discount in Section
38-73-760(e) for twenty-four months following October 1, 1993
having one or more merit rating plan points."
SECTION 27. The 1976 Code is amended by adding:
"Section 56-10-275. Notwithstanding any other provision
of law, any person who operates or allows an uninsured motor
vehicle to be operated shall suffer the immediate impoundment of
such vehicle until such time as he posts liability insurance in the
amount required by Chapter 77 of Title 38 and pays any storage
and impoundment fee, together with any other fines or fees imposed
for the operation of an uninsured motor vehicle."
SECTION 28. Sections 38-73-1410 and 38-77-595 of the 1976
Code are repealed.
SECTION 29. Sections 38-77-600, 38-77-605, 38-77-610,
38-77-620, and 38-77-625 of the 1976 Code are repealed July 1,
2000.
SECTION 30. This act takes effect October 1, 1995.
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