Download This Bill in Microsoft Word format
Indicates Matter Stricken
Indicates New Matter
S. 412
STATUS INFORMATION
General Bill
Sponsors: Senators McConnell, Elliott, Rankin, Cleary, Campsen, Ford, Knotts and Scott
Document Path: l:\s-jud\bills\mcconnell\jud0056.gfm.doc
Companion/Similar bill(s): 547
Introduced in the Senate on February 7, 2007
Currently residing in the Senate Committee on Banking and Insurance
Summary: Catastrophe Modeling Act; Hurricane Underwriting Association Act; Insurance Accountability, Reorganization, and Relief Act of 2007
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number
-------------------------------------------------------------------------------
2/7/2007 Senate Introduced and read first time SJ-24
2/7/2007 Senate Referred to Committee on Banking and Insurance SJ-24
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
TO ENACT THE "SOUTH CAROLINA INSURANCE ACCOUNTABILITY, REORGANIZATION, AND RELIEF ACT OF 2007" INCLUDING PROVISIONS; TO AMEND SECTION 1-30-10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEPARTMENTS OF STATE GOVERNMENT, SO AS TO PROVIDE THAT THE DIRECTOR OF THE DEPARTMENT OF INSURANCE SHALL BE ELECTED BY THE QUALIFIED VOTERS OF THE STATE; TO AMEND ARTICLE 5, CHAPTER 75, TITLE 38, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO WIND AND HAIL INSURANCE, SO AS TO PROVIDE FOR THE "SOUTH CAROLINA HURRICANE UNDERWRITING ASSOCIATION ACT", TO RENAME THE "SOUTH CAROLINA WIND AND HAIL UNDERWRITING ASSOCIATION" THE "SOUTH CAROLINA HURRICANE ASSOCIATION", AND TO REVISE THE ORGANIZATION, GOVERNANCE, DUTIES, FUNCTIONS, AND PROCEDURES OF THE ASSOCIATION; TO AMEND SECTION 38-75-1140, RELATING TO REQUIREMENTS FOR MODELING ORGANIZATIONS, SO AS TO DELETE THE REQUIREMENT OF THE DIRECTOR'S APPROVAL FOR A MODELING ORGANIZATION THAT PREPARES CATASTROPHE MODELS; BY ADDING SECTION 38-75-1141, SO AS TO PROVIDE FOR THE "SOUTH CAROLINA CATASTROPHE MODELING ACT"; TO AMEND CHAPTER 75, TITLE 38 OF THE 1976 CODE BY ADDING AN ARTICLE TO ESTABLISH THE SOUTH CAROLINA HURRICANE DAMAGE MITIGATION PROGRAM WITHIN THE DEPARTMENT OF INSURANCE; AND TO AMEND SECTION 38-75-740, RELATING TO RESTRICTIONS ON NONRENEWAL OF POLICIES, SO AS TO PROVIDE THAT NOTICE OF NONRENEWAL MUST BE AT LEAST ONE HUNDRED DAYS PRIOR TO THE EXPIRATION OF THE POLICY OR AT LEAST ONE HUNDRED DAYS WRITTEN NOTICE PRIOR TO THE EXPIRATION OF THE POLICY, OR WRITTEN NOTICE BY JUNE FIRST, WHICHEVER IS EARLIER, IF THE NONRENEWAL, CANCELLATION, OR TERMINATION IS EFFECTIVE BETWEEN JUNE FIRST AND NOVEMBER THIRTIETH.
Whereas, the Department of Insurance, with its current structure and regulatory authority, has been unable to maintain adequately available and affordable property insurance for policy holders in areas facing the greatest risk of hurricane exposure; and
Whereas, without reform, the South Carolina Wind and Hail Underwriting Association cannot adequately meet the needs of coastal residents for hurricane insurance; and
Whereas, an adequate market for hurricane insurance is necessary for the economic stability and welfare of the State; and
Whereas, without an adequate market for hurricane insurance, the orderly growth and development of the State is severely impeded. Now, therefore,
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. This act may be cited as the "South Carolina Insurance Accountability, Reorganization, and Relief Act of 2007".
SECTION 1. Section 1-30-10(B) of the 1976 Code is amended to read:
SECTION 1. Article 5, Chapter 75 of Title 38 of the 1976 Code is amended to read:
Section 38-75-310. In this article, unless the context otherwise requires:
(1) 'Essential property insurance' means insurance against direct loss to property as defined and limited in the wind and hail insurance policy and forms approved by the director or his designee; and after January 1, 1995, at the request of the insured, coverage for:
(a) actual loss of business income; or
(b) additional living expense; or
(c) fair rental value loss.
Prior to November 1, 1994, the South Carolina Wind and Hail Underwriting Association must file with the Department for approval additional policy forms defining the terms of and providing coverage for actual loss of business income, additional living expense and fair rental value loss.
(2) 'Association' means the South Carolina Wind and Hail Underwriting Association established pursuant to the provisions of this article.
(3) 'Plan of operation' means the plan of operation of the association approved or promulgated by the department pursuant to the provisions of this article.
(4) 'Insurable property' means immovable property at fixed locations in coastal areas of the State as that term is hereinafter defined, or tangible personal property located therein, which property is determined by the association to be in an insurable condition as determined by reasonable underwriting standards, but not to include farm or manufacturing property, or motor vehicles which are eligible to be licensed for highway use. Any structure commenced on or after September 15, 1971, not built in substantial compliance with the Southern Standard Building Code, including the design-wind requirements therein, is not an insurable risk under the terms of this article. Any structure commenced on or after September 15, 1971, shall comply with any construction and zoning requirements affecting the structure, promulgated or adopted pursuant to the requirements of the Federal Flood Insurance Program.
(5) 'Coastal area' means:
(a) all areas in Beaufort County and Colleton County which are east of the west bank of the intracoastal waterway;
(b) the following areas in Georgetown County: all areas between the Harrell Siau Bridge and Murrells Inlet which are east of a line paralleling and lying one hundred fifty feet east of U.S. Highway No. 17 Business, all areas in Murrells Inlet which are east of U.S. Highway No. 17 Business, and Cedar Island, North Island, and South Island;
(c) all areas in Horry County east of a line paralleling and lying one hundred fifty feet east of U. S. Highway No. 17 Business;
(d) the following areas in Charleston County: Edingsville Beach, Kiawah Island, Botany Bay Island, Folly Island, Seabrook Island, Morris Island, and all areas north of the city of Charleston which are east of the west bank of the intracoastal waterway.
(6) 'Net direct premiums' means gross direct premiums excluding reinsurance assumed and ceded written on property other than farm or manufacturing in this State for fire and extended coverage insurance, including the fire and extended coverage components of homeowners policy and commercial multiple peril package policies, less return premiums upon canceled contracts, dividends paid or credited to policyholders, or the unused or unabsorbed portion of premium deposits.
(7) 'Seacoast area' means all areas within Horry, Georgetown, Berkeley, Charleston, Dorchester, Colleton, Beaufort, and Jasper Counties.
Section 38-75-320. The purpose of this article is to provide a method whereby wind and hail insurance may be obtained more easily and equitably in the coastal areas of this State.
Section 38-75-330. There is created the South Carolina Wind and Hail Underwriting Association, an unincorporated association whose responsibilities, liability, and regulations are governed and defined by this article, consisting of all private insurers authorized to write and engage in writing property insurance within this State on a direct and statewide basis, but excluding insurers whose writings are limited to property wholly owned by parent, subsidiary, or allied organizations, or insurers whose writings are limited to property wholly owned by religious organizations, provided, however, as a condition of exemption from membership such insurers providing property insurance for insurable property in the coastal area as defined by this article shall also provide essential property insurance for such risks. Every such insurer must be a member of the association and must remain a member of the association so long as the association is in existence as a condition of its authority to continue to transact the business of insurance in this State.
Section 38-75-340. The association must operate pursuant to a plan of operation which shall set forth the number, qualifications, terms of office, and manner of election of the members of the board of directors and shall provide for the efficient, economical, fair, and nondiscriminatory administration of the association and for the prompt and efficient provision of essential property insurance in the coastal areas of the State so as to promote orderly community development in those areas and to provide means for the adequate maintenance and improvement of the property in such areas. The plan may include the establishment of necessary facilities, management of the association, plan for the assessment of members to defray losses and expenses, reasonable underwriting standards, commissions to be paid to agents or brokers, procedures for the acceptance and cession of reinsurance, procedures for determining the amounts of insurance to be provided to specific risks, time limits and procedures for processing applications for insurance, and for any other provisions considered necessary by the director or his designee to carry out the purposes of this article.
Insurance effected pursuant to this article shall have limits of liability provided in the plan of operation. The director or his designee shall approve the limits. Excess insurance is not permitted until the maximum available under the plan has been purchased. Thereafter, excess insurance may be purchased and must be included for the purpose of meeting any coinsurance requirement.
The directors of the association may, subject to the approval of the director or his designee, amend the plan of operation at any time. The director or his designee shall review the plan of operation, including the rate structure and loss experience, not less than once in each calendar year. After review of the plan the director or his designee may amend the plan upon approval of the directors of the association.
Section 38-75-350. (a) Any person having an insurable interest in insurable property is entitled to apply to the association for coverage and for an inspection of the property. The application must be made on behalf of the applicant by a licensed broker or agent authorized by him. Applications must be submitted on forms prescribed by the association and approved by the director or his designee. The application shall contain a statement as to whether or not there are any unpaid premiums due from the applicant for fire insurance on the property. The term 'insurable interest' as used in this section includes any lawful and substantial economic interest in the safety or preservation of property from loss, destruction, or pecuniary damage.
(b) If the association determines that the property is insurable and that there is no unpaid premium due from the applicant for prior insurance on the property, the association upon receipt of the premium, or such portion thereof as is prescribed in the plan of operation, shall cause to be issued a policy of essential property insurance for a term of at least one year.
(c) If the association, for any reason, denies an application and refuses to cause to be issued an insurance policy on insurable property to any applicant or takes no action on an application within the time prescribed in the plan of operation, the applicant may appeal to the director or his designee and the director or a member of his staff designated by him, after reviewing the facts, may direct the association to issue or cause to be issued an insurance policy to the applicant. In carrying out its duties pursuant to this section, the director or his designee may request, and the association shall provide, any information the director or his designee considers necessary to a determination concerning the reasons for the denial or delay of the application.
Section 38-75-360. The Association, pursuant to the provisions of this article and the plan of operation, and with respect to essential property insurance on insurable property, has the power on behalf of its members:
(a) To cause to be issued policies of insurance to applicants.
(b) To assume reinsurance from its members.
(c) To cede reinsurance to its members and to purchase reinsurance in behalf of its members.
Section 38-75-370. All members of the association shall participate in its writings, expenses, profits, and losses in the proportion that the net direct premium of the member written in this State during the preceding calendar year bears to the aggregate net direct premiums written in this State by all members of the association, as certified to the association by the department after review of annual statements, other reports, and other statistics which the department considers necessary to provide the information required and which the department is authorized to obtain from a member of the association. After certification by the department, the association may rely on the member company's annual statement in determining the company's participation in profits and losses for each year.
Each member's participation in the association must be determined annually in the same manner as the initial determination. An insurer authorized to write and engage in writing insurance, the writing of which requires the insurer to be a member of the association pursuant to Section 38-75-330, becomes a member of the association on January first immediately following the authorization. The determination of the insurer's participation in the association must be made as of the date of the membership in the same manner as for all other members of the association. Member insurers shall receive credit annually for essential property insurance voluntarily written in the coastal area and their participation in the writings of the association must be reduced accordingly. The board of directors shall authorize the method of determining the credit. In order to receive credit for essential property voluntarily written in the coastal area, each member company shall submit its requests by March thirty-first of the year for which credit is sought.
The assessment of a member insurer after hearing may be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the director or his designee, payment of the assessment would render the insurer insolvent or in danger of insolvency or would otherwise leave the insurer in a condition so that further transaction of the insurer's business would be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. If payment of an assessment against a member insurer is deferred by order of the director or his designee in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In its order of deferral, or in necessary subsequent orders, the director or his designee shall prescribe a plan by which the assessment so deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Profits, dividends, or other funds of the association to which the insurer is otherwise entitled must not be distributed to the impaired insurer but must be applied toward repayment of an assessment until the obligation has been satisfied. The association shall distribute the repayments, including interest, to the other member insurers on the basis at which assessments were made.
Section 38-75-375. (A) If a member company perceives an assessment or interest levied by the association to be unjust or illegal, the company shall pay the assessment or interest under protest in writing within thirty days of the assessment or interest charge. Upon receiving this payment, the association shall pay the money collected into the association account and designate the money as having been paid under protest.
(B) A member company paying an assessment or interest under protest shall appeal to the association within thirty days after making the payment. If it is determined in that appeal that the assessment or interest was collected unjustly or illegally, the association shall refund the assessment or interest to the payor.
(C) If a member company fails to pay an assessment or interest within thirty days of the assessment or interest charge by the association, the company is subject to disciplinary procedures pursuant to Section 38-5-120 or 38-5-130.
Section 38-75-380. There may be no liability on the part of and no cause of action of any nature may arise against the Department or any of its staff or the Association or its agents, employees, or any participating insurer for any inspections made hereunder or any statements made in good faith by them in any reports or communications concerning risk submitted to the Association or at any administrative hearings conducted in connection therewith under the provisions of this article.
Section 38-75-385. There is no liability on the part of, and no cause of action of any nature may arise against, any member insurer, the association's agents or employees, the board of directors, or the director, his designees, or his representatives for any act or omission in the performance of their powers and duties under this article. This section does not relieve the association of any of its liability.
Section 38-75-386. No liability on the part of, and no cause of action of any nature may arise against, the director, the Department of Insurance or its staff, the association, any member insurer, the association's agents or employees, its Board of Directors, or the legal representatives of any of the above persons, for any act or omission made in good faith or for any statement made to, or for information provided to, any insurer regarding rates; premiums; classifications; cancellations, determinations, or nonrenewals of coverage; underwriting; inspections; or claims experience history made to facilitate the underwriting of essential property insurance for risks in the coastal area by private insurers or to facilitate competition for the underwriting of essential property insurance for risks in the coastal area among private insurers.
Section 38-75-390. Any member of the Association who is designated to receive and write essential property insurance from or through the Association shall one hundred percent cede to the Association that essential property insurance.
Section 38-75-400. The rates, rating plans, and rating rules applicable to the insurance written by the association are those approved for use of the association by the director or his designee. Surcharges may be used as approved by the director or his designee. Rates may include rules for classification of risks insured hereunder and rate modifications thereof.
Section 38-75-410. (A) A person insured pursuant to this article or his representative or a member company who is aggrieved by an act, ruling, or decision of the association:
(1) regarding rates, classification of risks, assessments, voluntary credits, cancellation or termination of policies, or underwriting shall appeal to the director or his designee within sixty days after the act, ruling, or decision;
(2) other than those specified in item (1), may appeal to the director or his designee within thirty days after the act, ruling, or decision.
(B) Hearings held by the director or his designee pursuant to this section must be in accordance with the procedures set forth in Chapter 3, Title 38 and Article 3, Chapter 23, Title 1, 'Administrative Procedures'.
Section 38-75-420. All reports of inspection performed by or on behalf of the Association must be made available to the members of the Association, applicants, agent or broker, and the Department.
Section 38-75-430. The Association shall file with the Department by March thirty-first of each year a statement which summarizes the transactions, conditions, operations, and affairs of the Association during the preceding fiscal year ending October thirty-first. The statement shall contain any matters and information prescribed by the Department and must be in the form required by it. The Department may at any time require the Association to furnish to it any additional information with respect to its transactions or any other matter which it considers material to assist it in evaluating the operation and experience of the Association.
Section 38-75-440. The Department may make an examination into the affairs of the Association and in undertaking the examination may hold a public hearing. The expense of the examination must be borne and paid by the Association.
Section 38-75-450. The department has authority to make reasonable regulations, not inconsistent with law, to enforce, carry out, and make effective the provisions of this article after notice and hearing before the Administrative Law Judge Division.
Section 38-75-460. The director or his designee, by written order, temporarily may expand the area in which the association shall provide essential property insurance. The director or his designee shall find and declare the existence of an emergency because of the unavailability of coastal property insurance or other unavailability of coastal property insurance on a reasonable basis through normal channels. The order must include the surveys of the market conducted in order to make the determination. The director or his designee may expand the area in which the association shall provide essential property insurance to the whole area or just part of the area. The director may expand the area by construction type or age of construction. The area may not be expanded further than the seacoast territory as defined in Section 38-75-310(7) and may not be expanded to cover the area for more than twenty-four months. If the director or his designee issues an order that expands the area in which the association provides essential property insurance, he shall notify the General Assembly of that order and he shall recommend to the General Assembly any appropriate statutory changes in the law concerning the definition of 'coastal area' which he believes needs to be enacted.
Section 38-75-300. It is hereby declared by the General Assembly that an adequate market for hurricane insurance is necessary for the economic stability and welfare of the State and that without such insurance the orderly growth and development of the State is severely impeded.
Section 38-75-305. This article may be cited as the 'South Carolina Hurricane Underwriting Association Act'.
Section 38-75-310. In this article, unless the context otherwise requires:
(1) 'Assessable insureds' means all persons in zone one or zone two who procure one or more subject lines of business from a licensed insurer, a surplus line, nonadmitted insurer, or unauthorized insurer, and who obtain hurricane insurance from the association. An 'assessable insured' may include a person in zone three who procures one or more subject lines of business from a licensed insurer, a surplus line, nonadmitted insurer, or unauthorized insurer, and who applies and is accepted to obtain hurricane insurance from the association in the manner provided in this article.
(2) 'Association' means the South Carolina Hurricane Underwriting Association established pursuant to the provisions of this article.
(3) 'Association board' means the board appointed pursuant to Section 38-75-325(A).
(4) 'Commercial coverage' means policies for small commercial insureds where the total combined premiums to be paid for these policies for one insured is less than fifty thousand dollars annually.
(5) 'Department' means the Department of Insurance.
(6) 'Director' means the Director of the Department of Insurance.
(7) 'Hurricane insurance' means insurance against direct loss to property and indirect losses resulting from a direct loss to insurable property as a result of a hurricane or a tropical storm so named by the National Hurricane Center of the National Weather Service, as those losses are defined and limited in the association's hurricane insurance policy and forms approved by the director or his designee. 'Hurricane insurance' must include the coverage required by this article.
(8) 'Insurable interest' includes any lawful and substantial economic interest in the safety or preservation of property from loss, destruction, or pecuniary damage.
(9) 'Insurable property' means immovable property at fixed locations in the State, or tangible personal property located therein, which property is determined by the association to be in an insurable condition as determined by reasonable underwriting standards, but not to include farm or manufacturing property, or motor vehicles which are eligible to be licensed for highway use. Any structure commenced on or after September 15, 1971, not built in substantial compliance with the Southern Standard Building Code, including the design-wind requirements therein, is not an insurable risk under the terms of this article. Any structure commenced on or after September 15, 1971, shall comply with any construction and zoning requirements affecting the structure, promulgated or adopted pursuant to the requirements of the Federal Flood Insurance Program.
(10) 'Member insurer' means an insurer required by Section 38-75-320 to be a member of the South Carolina Hurricane Underwriting Association.
(11) 'Membership' means the insurers required by Section 38-75-320 to be members of the South Carolina Hurricane Underwriting Association.
(12) 'Plan of operation' means the plan of operation of the association approved by the department pursuant to the provisions of this article.
(13) Residential coverage means:
(a) personal lines residential coverage, which consists of the type of coverage provided by homeowner's, mobile home owner's, dwelling, tenant's, condominium unit owner's, and similar policies; and
(b) commercial lines residential coverage, which consists of the type of coverage provided by condominium associations, apartment buildings, and similar policies.
(14) 'Subject lines of business' means the following lines of business: fire, allied lines, homeowners multiperil, and the property insurance portion of commercial multiperil policies.
(15) 'Zone one' means:
(a) all areas in Beaufort County and Colleton County which are east of the west bank of the intracoastal waterway;
(b) the following areas in Georgetown County: all areas between the Harrell Siau Bridge and Murrells Inlet which are east of a line paralleling and lying one hundred fifty feet east of U.S. Highway No. 17 Business, all areas in Murrells Inlet which are east of U.S. Highway No. 17 Business, and Cedar Island, North Island, and South Island;
(c) all areas in Horry County east of a line paralleling and lying one hundred fifty feet east of U.S. Highway No. 17 Business; and
(d) the following areas in Charleston County: Edingsville Beach, Kiawah Island, Botany Bay Island, Folly Island, Seabrook Island, Morris Island, and all areas north of the city of Charleston which are east of the west bank of the intracoastal waterway.
(16) 'Zone two' means all areas within Horry, Georgetown, Berkeley, Charleston, Dorchester, Colleton, Beaufort, and Jasper Counties not included in zone one.
(17) 'Zone three' means all areas in South Carolina not included in zone one or zone two.
Section 38-75-315. The purpose of this article is to provide a method to obtain adequate residential and commercial hurricane insurance more easily and equitably in the coastal areas of this State.
Section 38-75-320. (A) On July 1, 2007, there is created the South Carolina Hurricane Underwriting Association, a public body politic and corporate, a constituted authority of the State of South Carolina, and a successor to the South Carolina Wind and Hail Underwriting Association, whose responsibilities, liabilities, and regulations are governed and defined by this article. All private insurers authorized to write and engage in writing property insurance within zone one, zone two, or both zones one and two of this State, whether admitted or not admitted, must be member insurers in the association, except that the following insurers are not required to be in the association membership:
(1) insurers whose writings are limited to property wholly owned by parent, subsidiary, or allied organizations;
(2) insurers whose writings are limited to property wholly owned by religious organizations; or
(3) insurers that as a condition of exemption from membership provide property insurance for insurable property in zone one, zone two, or both zone one and zone two and also provide hurricane insurance for such risks.
(B) A private insurer is not authorized to write and engage in writing property insurance within zone one, zone two, or both zones one and two of this State, whether admitted or not admitted, unless: (1) the insurer is a member insurer in the association, or (2) the private insurer, as a condition of exemption from membership, provides property insurance for insurable property in zone one, zone two, or both zone one and zone two and also provides hurricane insurance for such risks. A private insurer violating this provision is subject to administrative disciplinary action and penalties as provided by Chapter 2 of this title.
(C) Every member insurer must be and remain in the membership so long as the association is in existence as a condition of the insurer's authority or ability to continue to transact the business of insurance in this State.
(D) Any member insurer who is designated to receive and write hurricane insurance from or through the association shall one hundred percent cede to the association that hurricane insurance. Member insurers may issue the endorsement and bill the insured directly and remit funds and coverage information to the association. The endorsement issued to provide coverage shall follow the forms and coverage of the policy to which it is attached.
Section 38-75-325. (A) The association board is composed of nine members. The director or his designee and the Consumer Advocate or his designee serve as ex-officio and non-voting members of the board. The following seven members must be appointed by the Governor with the advice and consent of the Senate:
(1) one member appointed at large who shall serve as the association board chairman;
(2) two members appointed from the nominations by insurance companies operating in zone one, zone two, or both zone one and zone two;
(3) two members appointed from nominations by insurance agents operating in zone one, zone two, or both zone one and zone two; and
(4) two members appointed to represent consumers.
(B) The term of office for a member of the association board is four years; however, the initial appointments for one member as provided in subsection (A)(2), one member as provided in subsection (A)(3), and one member as provided in subsection (A)(4) must be for a term of two years. A vacancy on the association board must be filled in the same manner as the original appointment.
(C) Members of the association board are subject to the requirements of public members under the provisions of Title 8, Chapter 13, the State Ethics Act.
(D) The association board must select a Chief Executive Officer and Chief Financial Officer. The Chief Executive Officer shall select the staff necessary for the operation of the association. The Chief Executive Officer, Chief Financial Officer, and the staff are subject to the requirements of public employees under the provisions of Title 8, Chapter 13, the State Ethics Act.
Section 38-75-330. (A)(1) The association must operate pursuant to a plan of operation that provides for the efficient, economical, fair, and nondiscriminatory administration of the association and for the prompt and efficient provision of hurricane insurance in zone one and zone two of the State so as to promote orderly community development in those areas and to provide means for the adequate maintenance and improvement of the property in such areas.
(2) The plan of operation also may offer provision of hurricane insurance to persons in zone three who meet the requirements of this article and obtain the association's hurricane insurance through member insurers.
(3) The plan of operation must include the rate making requirements provided in this article and may include the establishment of necessary facilities, management of the association, plan for the assessment of the assessable insureds to defray losses and expenses, reasonable underwriting standards, procedures for the acceptance and cession of reinsurance, procedures for determining the amounts of insurance to be provided to specific risks, time limits and procedures for processing applications for insurance, and for any other provisions considered necessary by the association board to carry out the purposes of this article.
(B) Insurance affected pursuant to this article shall have limits of liability required by this article and provided in the plan of operation. The director or his designee shall approve the limits and must verify that the limits meet or exceed the requirements of this article. Excess insurance is not permitted until the maximum available under the plan of operation has been purchased. Thereafter, excess insurance may be purchased and must be included for the purpose of meeting any coinsurance requirement.
(C) The association board may, subject to the approval of the director or his designee, amend the plan of operation at any time. The director or his designee must review the plan of operation, including the rate structure and loss experience, not less than once in each calendar year.
(D) After review of the plan of operation, the director or his designee:
(1) must direct the association board to amend the plan of operation if necessary to comply with the requirements of this article; and
(2) may propose amendments to the plan of operation that enhance the association's compliance with subsection (A) and that may become effective upon approval of the association board.
Section 38-75-335. (A) The association must develop rates, rating plans, rules, policy forms, endorsement forms, and supplemental forms to be used in connection with the issuance of policies or endorsements for approval by the association board. All rates, rating plans, rules, policy forms, endorsement forms, and supplemental forms to be used in connection with the issuance of policies or endorsements must be filed with the department for approval by the director.
(B) Rates for policies must be reviewed by the association at least annually to determine they are actuarially justified. The association must not develop rates which are excessive, inadequate, or unfairly discriminatory. Rates must be based upon actuarially calculated hurricane exposure of the properties in the zone where the insurable property is located. Rates shall include an appropriate catastrophe loading factor and may include rules for classification of risks insured and rate modifications. Surcharges may be used only if approved by the director prior to use.
(C) If the association board determines that a rate filing is necessary, it shall make a filing with the department for approval by the director. A copy of the filing must be provided simultaneously to the Consumer Advocate. All rates must be approved by the director prior to use.
(D) The director or his designee must review the filing as soon as reasonably possible in order to determine whether it meets the requirements of this article. The filing must be on file for a waiting period of thirty days before it may become effective. This period may be extended by the director or his designee for an additional period not to exceed sixty additional days if he gives written notice within the waiting period to the association that he needs additional time for the consideration of the filing. Within this period, if the director or his designee believes the information filed is not complete, the director or his designee must notify the association of additional information to be provided.
(E) Upon written application by the association, the director or his designee may authorize a filing which he has reviewed to become effective before the expiration of the waiting period or any extension thereof.
(F) All requests for hearings pursuant to this article must be made pursuant to the Title 1, Chapter 23, the Administrative Procedures Act and the rules governing practice before the Administrative Law Court. A contested hearing pursuant to this article is before the Administrative Law Court, with notice to, and an opportunity for a hearing by, affected parties. The Consumer Advocate may participate as a party in any such hearings.
(G) The association must develop hurricane underwriting restrictions that allow the association to suspend writing binding new policies or increases in existing coverage when any part of the State is threatened, or potentially threatened, by the presence of a tropical depression or hurricane.
(H) All policy cancellations shall be in accordance with applicable law and the rules or orders of the department. Policies or binders in effect for less than sixty days may be cancelled at the option of the association for any reason. Policies or binders in effect for sixty days or more may only be cancelled by the association for the following reasons:
(1) non-payment of premiums, application fees, or assessments;
(2) misrepresentation of any material fact, either before or after a loss;
(3) for cause which would have been grounds for non-acceptance of the risk had such cause been known at the time of acceptance;
(4) for changes in physical condition of the property or other change in conditions that would make the property uninsurable or otherwise ineligible for coverage by the plans;
(5) for evidence of incendiarism; or
(6) for any other reason permitted by applicable law.
(I) Except as provided in subsection (H), the association must give an insured written notice of nonrenewal, cancellation, or termination at least one hundred days prior to the effective date of the nonrenewal, cancellation, or termination; however, the association must give at least one hundred days written notice, or written notice by June first, whichever is earlier, for any nonrenewal, cancellation, or termination that would be effective between June first and November thirtieth. The notice must include the reason or reasons for nonrenewal, cancellation, or termination.
(J) An agent's or broker's commission for writing a policy issued under the provisions of this article must be fifty dollars regardless of the amount of the premium for the policy.
Section 38-75-340. (A) The association must provide hurricane insurance to persons in zone one or zone two who:
(1) have residential coverage or commercial coverage; and
(2) apply and are accepted for coverage as provided by this article.
(B) The association may provide hurricane insurance to persons in zone three who:
(1) have residential coverage or commercial coverage; and
(2) apply and are accepted for coverage as provided by this article.
(C) The hurricane insurance policy and forms must include that:
(1) the percentage hurricane deductible must be applied only once annually;
(2) in the case of a dwelling, coverage for wind-driven rain, regardless of whether an opening is made by the wind, is provided;
(3) coverage is provided for increased costs of construction; and
(4) immediate coverage is provided for cash sales in transactions that do not involve a mortgage.
(D) The hurricane insurance policy and forms must offer coverage for:
(1) actual loss of business income;
(2) additional living expense;
(3) fair rental value loss; and
(4) replacement value.
Section 38-75-345. (A) Any person having an insurable interest in insurable property is entitled to apply to the association for coverage and for an inspection of the property. The application must be made on behalf of the applicant by a licensed broker or agent authorized by him. Applications must be submitted on forms prescribed by the association and approved by the director or his designee. The application must contain a statement as to whether or not there are any unpaid premiums due from the applicant for fire insurance on the property.
(B) If the association determines that the property is insurable and that there is no unpaid premium due from the applicant for prior insurance on the property, the association upon receipt of the premium, or such portion thereof as is prescribed in the plan of operation, shall cause to be issued a policy of hurricane insurance for a term of at least one year.
(C) If the association, for any reason, denies an application and refuses to cause to be issued an insurance policy on insurable property to any applicant or takes no action on an application within the time prescribed in the plan of operation, the applicant may appeal to the director or his designee and the director or a member of his staff designated by him, after reviewing the facts, may direct the association to issue or cause to be issued an insurance policy to the applicant. In carrying out its duties pursuant to this section, the director or his designee may request, and the association shall provide, any information the director or his designee considers necessary to a determination concerning the reasons for the denial or delay of the application.
Section 38-75-350. (A) The association, pursuant to the provisions of this article and the plan of operation, and with respect to hurricane insurance on insurable property, has the power to:
(1) cause to be issued policies of insurance to applicants;
(2) assume reinsurance from its membership;
(3) cede reinsurance to and purchase reinsurance on behalf of its membership;
(4) retain any profits or excess reserves generated by the association, to be used to offset future deficits incurred by the association. Such retained funds shall be invested pursuant to the limitations set forth in this title for insurers; and
(5) borrow funds necessary to effectuate the purposes of this article. In connection therewith the association may agree to such terms and conditions as it considers necessary and proper, and the association may assign to the State or any agency or authority thereof, or to any private entity, the right to the receipt of assessments levied by the association to the extent necessary to provide for the payment of bonds issued by the State or such agency or authority, or such private agency, for the purpose of providing for the repayment of such borrowings.
(B) The association shall have the power to borrow funds, by issuing bonds or by incurring other indebtedness, and shall have other powers reasonably necessary to effectuate the requirements of this article. Prior to the issuance of any bonds pursuant to this chapter, the association shall file a transcript of the proceedings relating thereto in the office of the Secretary of State and the Secretary of State shall index the transcript in the manner provided in Section 11-15-20. The provisions of Section 11-15-30 shall apply to any bonds for which the transcript has been filed in accordance herewith. The association may issue bonds or incur other indebtedness, subject to approval by the department, that the action would enable it to efficiently meet the financial obligations of the association and that the financings are reasonably necessary to effectuate the requirements of this subsection. The association is authorized to take all actions needed to facilitate tax-free status for these bonds or indebtedness, including formation of trusts or other affiliated entities.
(C) The association shall have the authority to pledge assessments, reinsurance recoverables, market equalization and other surcharges, and other funds available to the association as security for bonds or other indebtedness. It is the intent of the General Assembly that no action be taken whose purpose is to impair any bond indenture or financing agreement or any revenue source committed by contract to such bond or other indebtedness.
Section 38-75-355. (A)(1) The General Assembly intends that the tax exemptions provided in this subsection augment the financial resources of the association in order to better enable the association to fulfill its public purpose.
(2) The association shall be considered a public body politic and corporate and a constituted authority of the State of South Carolina. However, the association is not and must not be considered a department, unit, or agency of the State.
(3) The association shall be exempt from the state corporate income tax.
(4) The association must seek to be established as a federally tax exempt organization with the ability to issue tax exempt bonds.
(5) The association must request from the Internal Revenue Service the appropriate and necessary rulings, letters, or other verification of the tax-exempt status of the association.
(6) All debts, claims, obligations, and liabilities of the association, whenever and however incurred, shall be the debts, claims, obligations, and liabilities of the association only and not of the State, its agencies, officers, or employees.
(7) Association monies shall not be considered part of the general fund of the State. The General Assembly must not budget for or provide recurring general fund appropriations to the association.
(8) The premiums, assessments, investment income, and other revenue of the association are funds received for providing property insurance coverage as required by this article, paying claims for persons insured by the association, securing and repaying debt obligations issued by the association, and conducting all other activities of the association, and must not be considered taxes, fees, licenses, or charges for services imposed by the General Assembly on individuals, businesses, or agencies outside state government.
(9) Bonds and other debt obligations issued by or on behalf of the association are not to be considered state bonds. Any bonds issued by the association, their transfer, and the income therefrom, including any profit made on the sale thereof, must at all times be free from taxation of every kind by the State and any political subdivision or local unit or other instrumentality thereof.
(10) The association is not required to obtain or to hold a certificate of authority issued by the department, nor is it required to participate as a member insurer of the South Carolina Insurance Guaranty Association.
(B) In addition to the powers contained elsewhere in this article, the association board has all powers necessary, useful, or appropriate to operate and administer the association, to effectuate the purposes of the association, and to perform its other functions including, but not limited to, the power to:
(1) have perpetual succession;
(2) sue and be sued in its own name;
(3) adopt, promulgate, amend, and repeal bylaws, not inconsistent with provisions in this article for the administration of the association's affairs and the implementation of its functions;
(4) enter into contracts, arrangements, and agreements with government units and other persons and execute and deliver all financing agreements, including bonds issued to support the borrowing by such government units to pay eligible costs of qualified projects, and other instruments necessary or convenient to the exercise of the powers granted in this article;
(5) enter into agreements with a department, agency, political subdivision, or instrumentality of the United States or of this State or of another state for the purpose of planning and providing for the financing of qualified projects or for the administration of the purposes and programs of this article;
(6) enter into, amend, and terminate agreements in the nature of interest rate swaps, forward security supply contracts, agreements for the management of interest rate risks, agreements for the management of cash flow, and other agreements of a similar nature, with respect to bonds issued pursuant to this article;
(7) procure insurance, guarantees, letters of credit, and other forms of collateral or security or credit support from any public or private entity, including any department, agency, or instrumentality of the United States or this State, for the payment of any bonds, including the power to pay premiums or fees on any insurance, guarantees, letters of credit, and other forms of collateral or security or credit support;
(8) borrow money through the issuance of bonds as provided in this article, and through the issuance of notes in anticipation of the issuance of these bonds;
(9) enter into contracts and expend funds to obtain accounting, management, legal, financial consulting, trusteeship, and other professional services necessary or convenient to the operations of the association; however, all matters relating to the designation and selection of bond counsel to the association is within the discretion of the State Treasurer;
(10) enter into contracts or agreements necessary, proper, or convenient for the effectuation of the powers and purposes of the association board and the association;
(11) invest funds held by the association under this article in any investment permitted for funds of this State, other than the state's retirement funds, or for funds of the political subdivisions of this State, in revenue bonds of government units, and in general obligations of other states whose general obligation debt is rated not lower than the general obligation debt of this State; and
(12) do all other things necessary or convenient to exercise powers granted or reasonably implied by this article or that may be necessary for the furtherance and accomplishments of the purposes of the association.
(E) Before the date which is one year and one day after which the association no longer has any bonds outstanding, the association has no authority to file a voluntary petition under Chapter 9 of the United States Bankruptcy Code or corresponding chapters or sections as may, from time to time, be in effect, and neither any public officer nor any organization, entity, or other person shall authorize the association to be or become a debtor under Chapter 9 or any successor or corresponding chapter or sections during the periods described in this subsection. The provisions of this paragraph are for the benefit of the holders of any bonds and are a part of the contractual obligation owed to such bondholders, and the State shall not modify or delete the provisions of this paragraph during the periods described in this article.
(F) In the exercise of their powers in this article, the association board and the association may obtain services in accordance with the procedures, guidelines, and criteria established by the association board for that purpose and are not restricted by Chapter 35 of Title 11, the South Carolina Consolidated Procurement Code, or any successor provision.
Section 38-75-360. (A) In the event that the association board determines that a deficit exists, the association board may levy assessments upon assessable insureds in order to remedy such deficit.
(B) An assessment must not be levied on assessable insureds until the accumulated profits or excess reserves of the association are exhausted.
(C) Assessable insureds are subject to regular and emergency assessments by the association based upon the average actuarially calculated hurricane exposure of the properties in the zone where the assessable insured's property is located.
(D) Assessments levied by the association on assessable insureds must be collected by the agent at the time the agent collects the premium tax and must be remitted to the association in accordance with guidelines developed in the association's plan of operation.
(E) When the association board determines that the deficit incurred in a particular calendar year cannot be remedied by regular or emergency assessments of assessable insureds, the remaining deficit must be financed through bonds or other indebtedness.
(F) When the deficit incurred in a particular calendar year cannot be remedied by regular or emergency assessments of assessable insureds or through bonds or other indebtedness, the association must notify the Governor in writing of the deficiency and request the ability to make assessments upon all persons in zone one, zone two, and zone three who procure one or more subject lines of business from a licensed insurer, a surplus line, nonadmitted insurer, or unauthorized insurer, and who are not assessable insureds under the provisions of this article. Only after receiving written authorization from the Governor is the association allowed to make emergency assessments on persons who are not assessable insureds. An assessment made on a person who is not an assessable insured must be based upon the average actuarially calculated hurricane exposure of the properties in the zone where the person's insured property is located.
(G) The association may pledge the proceeds of assessments, insurance and reinsurance recoverables, surcharges, and other funds available to the association as the source of revenue for and to secure bonds or other indebtedness, or lines of credit or other financing mechanisms issued or created under this subsection, or to retire any other debt incurred as a result of deficits or events giving rise to deficits, or in any other way that the association determines will efficiently recover such deficits. The purpose of the lines of credit or other financing mechanisms is to provide additional resources to assist the association in covering claims and expenses attributable to a catastrophe. The assessments under this section shall continue as long as any bonds issued or other indebtedness incurred with respect to a deficit for which the assessment was imposed remain outstanding, unless adequate provisions have been made for the payment of such bonds or other indebtedness pursuant to the documents governing such bonds or other indebtedness.
Section 38-75-365. (A) If a member insurer perceives an assessment or interest levied by the association to be unjust or illegal, the company shall collect and pay the assessment or interest under protest in writing within thirty days of the assessment or interest charge. Upon receiving this payment, the association shall pay the money collected into the association account and designate the money as having been paid under protest.
(B) A member insurer paying an assessment or interest under protest shall appeal to the association within thirty days after making the payment. If it is determined in that appeal that the assessment or interest was collected unjustly or illegally, the association shall refund the assessment or interest to the payor.
(C) If a member insurer fails to pay an assessment or interest within thirty days of the assessment or interest charge by the association, the insurer is subject to disciplinary procedures pursuant to Section 38-5-120 or 38-5-130.
Section 38-75-370. (A) A person insured pursuant to this article or his representative or a member insurer who is aggrieved by an act, ruling, order, or decision of the association may appeal to the director or his designee:
(1) within sixty days after the act, ruling, order, or decision regarding rates, classification of risks, assessments, voluntary credits, cancellation or termination of policies, or underwriting shall appeal to the director or his designee; or
(2) within thirty days of the act, ruling, order, or decision regarding any matter other than those specified in item (1).
(B) Hearings held by the director or his designee pursuant to this section must be in accordance with the procedures set forth in Chapter 3, Title 38 and Article 3, Chapter 23, Title 1, the 'South Carolina Administrative Procedures Act'.
Section 38-75-375. (A) There may be no liability on the part of and no cause of action of any nature may arise against the department or any of its staff or the association or its agents, employees, or any member insurer for any inspections made hereunder or any statements made in good faith by them in any reports or communications concerning risk submitted to the association or at any administrative hearings conducted in connection therewith under the provisions of this article.
(B) There is no liability on the part of, and no cause of action of any nature may arise against any member insurer, the association's agents or employees, the association board, or the director, his designees, or his representatives for any act or omission in the performance of their powers and duties under this article. This section does not relieve the association of any of its liability.
(C) No liability on the part of, and no cause of action of any nature may arise against, the director, the department or its staff, the association, any member insurer, the association's agents or employees, the association board, or the legal representatives of any of the above persons, for any act or omission made in good faith or for any statement made to, or for information provided to, any insurer regarding rates; premiums; classifications; cancellations, determinations, or nonrenewals of coverage; underwriting; inspections; or claims experience history made to facilitate the underwriting of hurricane insurance for risks in the zone one and zone two by private insurers or to facilitate competition for the underwriting of hurricane insurance for risks in zone one and zone two among private insurers.
Section 38-75-380. All reports of inspection performed by or on behalf of the association must be made available to the membership of the association, applicants, agent or broker, and the department.
Section 38-75-385. The association must file with the department by March thirty-first of each year a statement which summarizes the transactions, conditions, operations, and affairs of the association during the preceding fiscal year ending October thirty-first. The statement must be in the form required by the department and contain any matters and information prescribed by the department. The department may at any time require the association to furnish to it any additional information with respect to its transactions or any other matter which the department considers material to assist it in evaluating the operation and experience of the association.
Section 38-75-390. (A) On July 1, 2007, the employees, operational and administrative funds, assets, liabilities, real and personal property, and obligations of the South Carolina Wind and Hail Underwriting Association are transferred to the South Carolina Hurricane Underwriting Association, unless they are clearly identifiable as employees, funds, assets, liabilities, property, or obligations of a member insurer of the South Carolina Wind and Hail Underwriting Association.
(B) The Budget and Control Board shall cause all necessary actions to be taken to accomplish this transfer and shall, in consultation with the transferring employees and the Department of Insurance, prescribe the manner in which the transfer provided for in this section shall be accomplished. The board's action in facilitating the provisions of this section are ministerial in nature and shall not be construed as an approval process over any of the transfers. Any person or member insurer aggrieved by an action of the board concerning the transfer may seek redress through the Administrative Law Court within thirty days of the board's action.
(C) The South Carolina Hurricane Underwriting Association must continue to administer the obligations of the South Carolina Wind and Hail Underwriting Association until such time as those obligations have been satisfied in full as provided by law.
(D) Initial members of the South Carolina Hurricane Underwriting Association's board may be appointed prior to July 1, 2007, and after the provisions of this act are approved by the Governor."
SECTION 2. The funding for the South Carolina Hurricane Underwriting Association is provided from the Contingency Reserve Fund as authorized in Proviso 73.15 of the 2006-2007 general appropriation act.
SECTION 1. Section 38-75-1140 of the 1976 Code is amended to read:
"Section 38-75-1140. (A) In recognition of the use of natural hazard catastrophe computer models and other recently developed or improved actuarial methodologies for projecting natural hazard losses, the director or his designee may must make or cause to be made an evaluation of any natural hazard catastrophe model used in property rate filings in this State. Natural hazard catastrophe models are computer programs that estimate losses from potential natural hazard disasters, combining data on property exposures with information on natural hazards, such as storms or earthquakes, to generate estimates of potential losses.
(B) If required to do so by the director, a A modeling organization that prepares catastrophe models used by insurers in rate filings in this State shall submit an initial report to the director or his designee consisting of but not limited to:
(1) a statement of its qualification as a modeling organization;
(2) an outline of the background and experience of the staff of the modeling organization engaged in the development and preparation of the catastrophe models used by insurers in rate filings; and
(3) one or more statements describing and attesting to the validity of the model for use in predicting losses associated with natural hazard catastrophes in this State. A separate statement must be made by an individual possessing expertise appropriate to the hazard being modeled in fields such as meteorology, engineering, building codes, geology, and actuarial science as they apply to natural hazard catastrophes faced by this State.
(C) The modeling organization shall submit a supplemental report to the director or his designee following any substantially material revision of the model if the revision is used by insurers in determining rates for this State. The supplemental report must specify the changes made to the catastrophe model and contain one or more statements by experts attesting to the continuing validity of the model for use in predicting losses associated with natural hazard catastrophes in this State.
(D) If the director or his designee determines the expert statements provided to be insufficient, he may reject the report.
(E) In conducting his evaluation of a model, the director or his designee may rely on the report of an official of another state who has made such an evaluation pursuant to the laws of that state.
(F) Proprietary or trade secret information that is submitted in a report, or is obtained, developed, or compiled in the course of any evaluation must be kept confidential by the director."
SECTION 2. The 1976 Code is amended by adding:
"Section 38-73-1141. (A) This section may be cited as the 'South Carolina Catastrophe Modeling Act'.
(B) The General Assembly finds that:
(1) reliable projections of hurricane losses are necessary in order to assure that rates for residential property insurance meet the statutory requirement that rates be neither excessive nor inadequate;
(2) the ability to accurately project hurricane losses has been greatly enhanced in recent years through the use of computer modeling; and
(3) expert evaluation of computer models and other recently developed or improved actuarial methodologies for projecting hurricane losses is needed in order to resolve conflicts among actuarial professionals and provide both immediate and continuing improvement in the sophistication of actuarial methods used to set rates charged to consumers.
(C) The General Assembly declares that:
(1) It is the public policy of this State to encourage the use of the most sophisticated actuarial methods to assure that consumers are charged lawful rates for residential property insurance coverage.
(2) It is the General Assembly's intent to create the South Carolina Commission on Hurricane Loss Projection Methodology as a panel of experts to provide the most actuarially sophisticated guidelines and standards for projection of hurricane losses possible, given the current state of actuarial science.
(3) It is the General Assembly's intent that such standards and guidelines be used by an insurer in a rate filing to ensure that the rates are not inadequate, excessive, or unfairly discriminatory, and that if the way an insurer applied such standards and guidelines was erroneous, it must be shown by a preponderance of the evidence.
(4) It is the General Assembly's intent that such standards and guidelines be employed as soon as possible after the effective date of this section, and that they be subject to continuing review thereafter.
(D)(1) There is created the South Carolina Commission on Hurricane Loss Projection Methodology, which is assigned to the State Budget and Control Board. For the purposes of this section, the term 'commission' means the South Carolina Commission on Hurricane Loss Projection Methodology. The commission shall be administratively housed within the State Budget and Control Board, but it shall independently exercise the powers and duties specified in this section.
(2) The commission shall consist of the following eleven members:
(a) the Consumer Advocate;
(b) the senior employee of the State Budget and Control Board responsible for operations of the South Carolina Commission on Hurricane Loss Projection Methodology;
(c) the Executive Director of the South Carolina Hurricane Underwriting Association;
(d) the Director of the Division of Emergency Management;
(e) the actuary consultant to the Consumer Advocate;
(f) an employee of the Department of Insurance responsible for property insurance rate filings who is appointed by the Director of the Department of Insurance;
(g) five members appointed by the Governor with the advice and consent of the Senate and each having one of the following requirements:
(i) an actuary who is employed full time by a property and casualty insurer which was responsible for at least one percent of the aggregate statewide direct written premium for homeowner's insurance in the calendar year preceding the member's appointment to the commission;
(ii) an expert in insurance finance who is a full-time member of the faculty of the State University System and who has a background in actuarial science;
(iii) an expert in statistics who is a full-time member of the faculty of the State University System and who has a background in insurance;
(iv) an expert in computer system design who is a full-time member of the faculty of the State University System;
(v) an expert in meteorology who is a full-time member of the faculty of the State University System and who specializes in hurricanes; and
(vi) an expert in structural or wind engineering who is designated a Professional Engineer and who is familiar with South Carolina construction and building codes.
(h) Members designated under items (a) through (e) shall serve on the commission as long as they maintain their respective offices. The member appointed by the director of the office under item (f) shall serve on the commission until the end of the term of office of the director who appointed him or her, unless removed earlier by the director for cause. Members appointed by the Governor under subitems (g)(i) through (g)(vi) shall serve on the commission until the end of the term of office of the Governor who appointed them, unless earlier removed by the Governor for cause. Vacancies on the commission must be filled in the same manner as the original appointment.
(E) The State Budget and Control Board shall annually appoint one of the members of the commission to serve as chair.
(F) Members of the commission shall serve without compensation but shall be reimbursed for per diem and travel expenses.
(G) The State Budget and Control Board shall, as a cost of administration of the South Carolina Commission on Hurricane Loss Projection Methodology, provide for travel, expenses, and staff support for the commission and will assess the South Carolina Hurricane Association for the full cost of the commission in October of each year.
(H) There shall be no liability on the part of, and no cause of action of any nature shall arise against, any member of the commission or any member of the State Budget and Control Board for any action taken in the performance of their duties under this section. In addition, the commission may, in writing, waive any potential cause of action for negligence of a consultant, contractor, or contract employee engaged to assist the commission.
(I) The commission shall consider any actuarial methods, principles, standards, models, or output ranges that have the potential for improving the accuracy of or reliability of the hurricane loss projections used in residential property insurance rate filings. The commission shall, from time to time, adopt findings as to the accuracy or reliability of particular methods, principles, standards, models, or output ranges.
(J) In establishing reimbursement premiums for the South Carolina Commission on Hurricane Loss Projection Methodology, the State Budget and Control Board must, to the extent feasible, employ actuarial methods, principles, standards, models, or output ranges found by the commission to be accurate or reliable.
(K) With respect to a rate filing an insurer may employ actuarial methods, principles, standards, models, or output ranges found by the commission to be accurate or reliable to determine hurricane loss factors for use in a rate filing. These findings and factors are admissible and relevant in consideration of a rate filing by the department or in any arbitration or administrative or judicial review only if the department and the Consumer Advocate have access to all of the assumptions and factors that were used in developing the actuarial methods, principles, standards, models, or output ranges, and are not precluded from disclosing this information in a rate proceeding. In any rate hearing, the hearing officer or judge may determine whether the department and the Consumer Advocate were provided with access to all of the assumptions and factors that were used in developing the actuarial methods, principles, standards, models, or output ranges and determine their admissibility.
(L) The commission shall adopt revisions to previously adopted actuarial methods, principles, standards, models, or output ranges at least annually.
(M)(1) A trade secret that is used in designing and constructing a hurricane loss model and that is provided pursuant to this section by a private company to the commission, department, or Consumer Advocate is confidential and exempt from Freedom of Information Act requirements as provided in Section 30-4-40(a)(1).
(2) That portion of a meeting of the commission or of a rate proceeding on an insurer's rate filing at which a trade secret made confidential and exempt by this paragraph is discussed is exempt from Freedom of Information Act requirements as provided in Section 30-4-40(a)(1)."
SECTION 1. Chapter 75, Title 38 of the 1976 Code is amended by adding:
SECTION 1. Section 38-75-740 of the 1976 Code is amended to read:
"Section 38-75-740. (a) No insurance policy may be nonrenewed by an insurer except in accordance with the provisions of this section, and any nonrenewal attempted which is not in compliance with this section is ineffective.
(b) A policy written for a term of one year or less may be nonrenewed by the insurer at its expiration date by giving or mailing written notice of nonrenewal to the insured and the agent of record, if any, not less than thirty one hundred days prior to the expiration date of the policy; however, at least one hundred days written notice, or written notice by June first, whichever is earlier, must be given for any nonrenewal, cancellation, or termination that would be effective between June first and November thirtieth.
(c) Subject to subsection (c) of Section 38-75-760, a policy written for a term of more than one year or for an indefinite term may be nonrenewed by the insurer at its anniversary date by giving or mailing written notice of nonrenewal to the insured and the agent of record, if any, not less than thirty one hundred days prior to the anniversary date of the policy; however, at least one hundred days written notice, or written notice by June first, whichever is earlier, must be given for any nonrenewal, cancellation, or termination that would be effective between June first and November thirtieth.
(d) The notice required by this section must be given or mailed to the insured and the agent at their addresses shown in the policy or, if not reflected therein, at their last known addresses. Proof of mailing is sufficient proof of notice.
(e) Any notice of nonrenewal shall state the precise reason for nonrenewal."
SECTION 1. Except as otherwise provided, this act takes effect July 1, 2007.
This web page was last updated on Monday, October 10, 2011 at 1:28 P.M.