S*89 Session 106 (1985-1986)
S*0089(Rat #0219, Act #0145 of 1985) General Bill, By Saleeby
A Bill to amend Section 38-37-150, Code of Laws of South Carolina, 1976,
relating to the designation of producers to service insufficient automobile
insurance marketing outlets, so as to provide for the producers previously
designated to continue to serve with any commission rate change subject to
commission approval, to provide the qualifications which a producer shall meet
to be eligible for designation, to provide for a producer to furnish a bond
prior to designation, to provide for designated producers to be assigned
specific locations, to provide that when a designation is transferred to a
relative of a producer the duties may be performed by the producer's employees
or agency, to provide the circumstances under which a producer's designation
is terminated and the producer's licenses revoked, and to require the
governing board of any insurance facility to determine within thirty days
after this Act's effective date the locations assigned to designated
producers.-amended title
01/15/85 Senate Introduced and read first time SJ-121
01/15/85 Senate Referred to Committee on Banking and Insurance SJ-12
04/25/85 Senate Committee report: Favorable with amendment
Banking and Insurance SJ-1772
04/26/85 Senate Read second time SJ-1788
04/26/85 Senate Ordered to third reading with notice of
amendments SJ-1788
04/30/85 Senate Amended SJ-1797
04/30/85 Senate Read third time and sent to House SJ-1801
05/01/85 House Introduced and read first time HJ-2773
05/01/85 House Referred to Committee on Labor, Commerce and
Industry HJ-2773
05/23/85 House Committee report: Favorable Labor, Commerce and
Industry HJ-3346
05/28/85 House Read second time HJ-3531
05/29/85 House Read third time and enrolled HJ-3603
06/03/85 Ratified R 219
06/07/85 Signed By Governor
06/07/85 Effective date 06/07/85
06/07/85 Act No. 145
06/19/85 Copies available
(A145, R219, S89)
AN ACT TO AMEND SECTION 38-37-150, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO THE DESIGNATION OF PRODUCERS TO SERVICE INSUFFICIENT AUTOMOBILE
INSURANCE MARKETING OUTLETS, SO AS TO PROVIDE FOR THE PRODUCERS PREVIOUSLY
DESIGNATED TO CONTINUE TO SERVE WITH ANY COMMISSION RATE CHANGE SUBJECT TO
COMMISSION APPROVAL, TO PROVIDE THE QUALIFICATIONS WHICH A PRODUCER SHALL MEET
TO BE ELIGIBLE FOR DESIGNATION, TO PROVIDE FOR A PRODUCER TO FURNISH A BOND PRIOR
TO DESIGNATION, TO PROVIDE FOR DESIGNATED PRODUCERS TO BE ASSIGNED SPECIFIC
LOCATIONS, TO PROVIDE THAT WHEN A DESIGNATION IS TRANSFERRED TO A RELATIVE OF A
PRODUCER THE DUTIES MAY BE PERFORMED BY THE PRODUCER'S EMPLOYEES OR AGENCY, TO
PROVIDE THE CIRCUMSTANCES UNDER WHICH A PRODUCER'S DESIGNATION IS TERMINATED AND
THE PRODUCER'S LICENSES REVOKED, AND TO REQUIRE THE GOVERNING BOARD OF ANY
INSURANCE FACILITY TO DETERMINE WITHIN THIRTY DAYS AFTER THIS ACT'S EFFECTIVE
DATE THE LOCATIONS ASSIGNED TO DESIGNATED PRODUCERS.
Be it enacted by the General Assembly of the State of South Carolina:
Commissioner to survey areas
SECTION 1. Section 38-37-150 of the 1976 Code is amended to read:
"Section 38-37-150. (A) Not more than six months after July 9, 1974, or at
an earlier time as the commissioner considers necessary by reason of complaints
regarding want of access to automobile insurance in particular areas or want of
outlets for producers, the commissioner 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 commissioner 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 commissioner 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.
(B) After the effective date of this section, those producers previously
designated by the commissioner may continue to serve in that capacity under the
jurisdiction and control of the governing board of the facility, except that any
change in the rate of commissions allowed designated producers is subject to the
approval of the commission.
(C) A producer may be designated by the governing board of the facility upon
application for designation and is eligible for designation upon a finding by the
governing board that the applicant meets the following qualifications:
(1) The applicant was prior to October 1, 1974, and has been continually
since that date a licensed, resident property and casualty insurance agent and
agency owner or principal with authority from one or more licensed insurers to
write liability and physical damage insurance on private passenger automobiles;
(2) At the time of application the applicant is servicing private passenger
automobile insurance business, the net premiums on which exceeded one hundred
thousand dollars during the twelve months preceding application;
(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 because of any breach of agency agreement or other related, improper, or
unethical conduct, including but not limited to the systematic solicitation by
the applicant of residual or high-risk automobile insurance business or
deliberate acquisition by the applicant of a relatively large amount of residual
or high-risk automobile insurance business through purchase, merger, relocation,
or other means; and
(5) 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 as a producer, the applicant shall furnish at his
expense a bond in an amount 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 commissioner the
locations assigned by him to those producers whom the commissioner has
designated. Designated producers may not open or maintain any other locations
without the written authorization of the governing board. The governing board
shall terminate the designation, and the commissioner 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.
(F) The designation of a producer by the commissioner 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.
(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 cedeable to the facility. The governing board
shall terminate the designation of any producer, and the commissioner shall
revoke the licenses of the producer and of any other insurance agent and premium
service company knowingly involved in any connection which exists more than
thirty days after the effective date of this section. Upon termination, the
producer's expirations on designated business become the property of the
facility."
Locations to be determined
SECTION 2. Within not more than thirty days after the effective date of this
act, the governing board is required to determine the locations assigned by the
commissioner to designated producers, as provided in subsection (E) of Section
38-37-150 of the 1976 Code, as amended in Section 1 of this act.
Time effective
SECTION 3. This act shall take effect upon approval by the Governor. |