S 674 Session 112 (1997-1998)
S 0674 General Bill, By Saleeby
A BILL TO AMEND SECTION 38-73-10, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO THE DECLARATION OF THE PURPOSE AND THE CONSTRUCTION OF THE
CHAPTER ON PROPERTY, CASUALTY, AND INLAND MARINE INSURANCE AND SURETY RATES
AND RATEMAKING ORGANIZATIONS, SO AS TO REPLACE REFERENCES TO "DEPARTMENT OF
INSURANCE" WITH "DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE",
ALLOW FOR APPROVAL OF RISK CLASSIFICATION AND TERRITORIAL PLANS, AND DELETE
CERTAIN LANGUAGE; TO AMEND SECTION 38-73-720, AS AMENDED, RELATING TO
INSURANCE AND THE POWER TO ESTABLISH RISK AND TERRITORIAL CLASSIFICATIONS, SO
AS TO, AMONG OTHER THINGS, DELETE CERTAIN LANGUAGE AND ADD A PROVISION THAT
ANY RISK CLASSIFICATION OR CLASS PLAN WHICH DOES NOT RESULT IN AN INCOME LEVEL
INCREASE FOR AN INSURER MUST NOT BE CONSIDERED A RATE CHANGE SUBJECT TO THE
REQUIREMENTS OF SECTION 38-73-920; TO AMEND SECTION 38-73-730, AS AMENDED,
RELATING TO INSURANCE AND RISK CLASSIFICATION PLANS, SO AS TO, AMONG OTHER
THINGS, ALLOW FOR APPROVAL OF RISK AND TERRITORIAL CLASSIFICATION PLANS; TO
AMEND SECTION 38-73-737, RELATING TO THE DRIVER TRAINING COURSE CREDIT TO BE
APPLIED TOWARD LIABILITY AND COLLISION INSURANCE COVERAGE, SO AS TO, AMONG
OTHER THINGS, DELETE CERTAIN LANGUAGE, AND PROVIDE FOR DRIVER TRAINING COURSE
CREDIT MANDATED BY REGULATION BY ORDER OF THE DIRECTOR OF THE DEPARTMENT OF
INSURANCE OR HIS DESIGNEE OR WITHIN ANY INSURER'S APPROVED CLASSIFICATION
PLAN; TO AMEND SECTION 38-73-760, AS AMENDED, RELATING TO INSURANCE AND
UNIFORM STATISTICAL PLANS, SO AS TO, AMONG OTHER THINGS, ALLOW FOR APPROVAL OF
RISK AND TERRITORIAL CLASSIFICATION PLANS FOR AUTOMOBILE INSURANCE, DELETE
CERTAIN LANGUAGE AND PROVISIONS, AND ADD A PROVISION THAT, BY JANUARY 1, 1998,
THE REINSURANCE FACILITY SHALL FILE WITH THE DIRECTOR OF THE DEPARTMENT OF
INSURANCE FOR APPROVAL A MERIT RATING AND RISK CLASSIFICATION PLAN TO BE USED
BY ALL DESIGNATED CARRIERS FOR BUSINESS WRITTEN BY DESIGNATED PRODUCERS AND
THAT, IN THE ALTERNATIVE, THE FACILITY MAY A
04/22/97 Senate Introduced and read first time SJ-5
04/22/97 Senate Referred to Committee on Banking and Insurance SJ-5
A BILL
TO AMEND SECTION 38-73-10, AS AMENDED, CODE OF
LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE
DECLARATION OF THE PURPOSE AND THE CONSTRUCTION
OF THE CHAPTER ON PROPERTY, CASUALTY, AND INLAND
MARINE INSURANCE AND SURETY RATES AND
RATEMAKING ORGANIZATIONS, SO AS TO REPLACE
REFERENCES TO "DEPARTMENT OF INSURANCE" WITH
"DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS
DESIGNEE", ALLOW FOR APPROVAL OF RISK
CLASSIFICATION AND TERRITORIAL PLANS, AND DELETE
CERTAIN LANGUAGE; TO AMEND SECTION 38-73-720, AS
AMENDED, RELATING TO INSURANCE AND THE POWER TO
ESTABLISH RISK AND TERRITORIAL CLASSIFICATIONS, SO
AS TO, AMONG OTHER THINGS, DELETE CERTAIN
LANGUAGE AND ADD A PROVISION THAT ANY RISK
CLASSIFICATION OR CLASS PLAN WHICH DOES NOT
RESULT IN AN INCOME LEVEL INCREASE FOR AN INSURER
MUST NOT BE CONSIDERED A RATE CHANGE SUBJECT TO
THE REQUIREMENTS OF SECTION 38-73-920; TO AMEND
SECTION 38-73-730, AS AMENDED, RELATING TO
INSURANCE AND RISK CLASSIFICATION PLANS, SO AS TO,
AMONG OTHER THINGS, ALLOW FOR APPROVAL OF RISK
AND TERRITORIAL CLASSIFICATION PLANS; TO AMEND
SECTION 38-73-737, RELATING TO THE DRIVER TRAINING
COURSE CREDIT TO BE APPLIED TOWARD LIABILITY AND
COLLISION INSURANCE COVERAGE, SO AS TO, AMONG
OTHER THINGS, DELETE CERTAIN LANGUAGE, AND
PROVIDE FOR DRIVER TRAINING COURSE CREDIT
MANDATED BY REGULATION BY ORDER OF THE
DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS
DESIGNEE OR WITHIN ANY INSURER'S APPROVED
CLASSIFICATION PLAN; TO AMEND SECTION 38-73-760, AS
AMENDED, RELATING TO INSURANCE AND UNIFORM
STATISTICAL PLANS, SO AS TO, AMONG OTHER THINGS,
ALLOW FOR APPROVAL OF RISK AND TERRITORIAL
CLASSIFICATION PLANS FOR AUTOMOBILE INSURANCE,
DELETE CERTAIN LANGUAGE AND PROVISIONS, AND ADD
A PROVISION THAT, BY JANUARY 1, 1998, THE
REINSURANCE FACILITY SHALL FILE WITH THE DIRECTOR
OF THE DEPARTMENT OF INSURANCE FOR APPROVAL A
MERIT RATING AND RISK CLASSIFICATION PLAN TO BE
USED BY ALL DESIGNATED CARRIERS FOR BUSINESS
WRITTEN BY DESIGNATED PRODUCERS AND THAT, IN THE
ALTERNATIVE, THE FACILITY MAY ADOPT ANY MERIT
RATING AND RISK CLASSIFICATION PLAN ISSUED BY
ORDER OF THE DIRECTOR OR APPROVED FOR A LICENSED
RATING ORGANIZATION; TO AMEND SECTION 38-73-770,
AS AMENDED, RELATING TO INSURANCE AND THE
REQUIREMENT THAT CLASSIFICATION PLANS MUST BE
STRUCTURED TO PRODUCE FAIR RATES, SO AS TO
PROVIDE FOR APPROVAL OF CLASSIFICATION PLANS BY
THE DIRECTOR OF THE DEPARTMENT OF INSURANCE OR
HIS DESIGNEE; TO AMEND SECTION 38-77-10, AS
AMENDED, RELATING TO THE DECLARATION OF THE
PURPOSE OF THE CHAPTER ON AUTOMOBILE INSURANCE,
SO AS TO PROVIDE FOR APPROVAL OF RISK AND
TERRITORIAL CLASSIFICATION PLANS BY THE DIRECTOR
OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE,
AND DELETE REFERENCE TO A CODE SECTION; TO AMEND
SECTION 38-77-120, AS AMENDED, RELATING TO
AUTOMOBILE INSURANCE AND THE REQUIREMENTS FOR
NOTICE OF CANCELLATION OF OR REFUSAL TO RENEW A
POLICY OF INSURANCE, SO AS TO SPECIFY THAT THE
CODE SECTION APPLIES TO A POLICY OF AUTOMOBILE
LIABILITY INSURANCE; TO AMEND SECTION 38-77-285, AS
AMENDED, RELATING TO THE REQUIREMENT THAT ALL
AUTOMOBILE INSURANCE COVERAGES MUST BE IN ONE
POLICY, SO AS TO DELETE THE EXCEPTION THAT ALL
AUTOMOBILE INSURANCE POLICIES IN EFFECT AT A
CERTAIN TIME MAY CONTINUE IN FORCE UNTIL THE
EXPIRATION DATE OF THE POLICY; BY ADDING SECTION
56-5-5315 SO AS TO PROVIDE THAT A PERSON VIOLATING
SECTION 56-5-5310, WHICH MANDATES THAT A MOTOR
VEHICLE SHALL NOT BE OPERATED UNLESS ITS
EQUIPMENT IS IN GOOD WORKING ORDER AND THE
VEHICLE IS IN SAFE MECHANICAL CONDITION, FOR A
FIRST OFFENSE HAS TEN DAYS TO REPAIR A TAILLIGHT IF
THE VIOLATION WAS FOR NOT HAVING A TAILLIGHT IN
GOOD WORKING ORDER AND THAT IF THE PERSON IS
FOUND TO BE IN CONTINUING VIOLATION OF SECTION
56-5-5310 AFTER THE TEN-DAY PERIOD, HE MUST BE
PUNISHED AS PROVIDED BY LAW; TO AMEND SECTION
38-77-600, AS AMENDED, RELATING TO AUTOMOBILE
INSURANCE AND THE REINSURANCE FACILITY'S
RECOUPMENT CHARGE, SO AS TO DELETE THE CURRENT
PROVISIONS OF THE SECTION, AND ADD PROVISIONS
WHICH PROVIDE, AMONG OTHER THINGS, THAT THE
INSURANCE PREMIUM CHARGED BY AUTOMOBILE
INSURERS FOR LIABILITY COVERAGE UPON EACH
PRIVATE PASSENGER AUTOMOBILE AND FOR EACH
NONOWNER'S POLICY MUST INCLUDE A BASE
RECOUPMENT FEE, THAT FOR THE YEAR JULY 1, 1999 TO
JUNE 30, 1999 THAT BASE RECOUPMENT FEE MUST BE THE
RECOUPMENT FEE APPROVED FOR SAFE DRIVERS AS OF
JULY 1, 1997, THAT BEGINNING DECEMBER 2, 1998, THE
BASE RECOUPMENT FEE MUST BE REVIEWED ANNUALLY
BY DECEMBER SECOND BY A COMMITTEE, THAT THE
BASE RECOUPMENT FEE MUST BE CALCULATED BY
FACTORING NO MORE THAN .386 AGAINST THE TOTAL
LOSSES OF THE FACILITY FROM THE PRECEDING
FACILITY FISCAL YEAR, AND THAT THE RESULTING
PRODUCT MUST BE DIVIDED BY THE NUMBER OF
INSURED PRIVATE PASSENGER AUTOMOBILES WITHIN
THIS STATE; TO AMEND SECTION 38-77-620, AS AMENDED,
RELATING TO THE INCLUSION OF THE REINSURANCE
FACILITY'S RECOUPMENT CHARGES IN AUTOMOBILE
INSURANCE RATES, SO AS TO DELETE THE REFERENCE TO
SECTION 38-77-610 AND REPLACE IT WITH A REFERENCE
TO SECTION 38-77-600; TO AMEND SECTION 38-77-910, AS
AMENDED, RELATING TO THE AUTOMOBILE INSURANCE
LAW OF SOUTH CAROLINA AND UNLAWFUL
DISTINCTIONS BETWEEN POLICYHOLDERS OR
APPLICANTS, SO AS TO PROVIDE FOR APPROVAL OF
RATING PLANS FOR THE CLASSIFICATION OF RISKS AND
TERRITORIES, AND DELETE REFERENCE TO THE
DEPARTMENT OF INSURANCE AND REPLACE IT WITH
"DIRECTOR OR HIS DESIGNEE"; 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, AMONG OTHER THINGS, PROVIDE FOR APPROVAL
OF A RATING PLAN FOR THE CLASSIFICATION OF RISKS,
DELETE CERTAIN LANGUAGE, AND PROVIDE THAT IF AN
INSURER CEDES CERTAIN CLASSES OR RATING
CATEGORIES WHICH PRODUCE LOSS RATIOS TO THE
FACILITY WHICH ARE GREATER THAN THE STATEWIDE
AVERAGE FOR THE SAME OR SUBSTANTIALLY SIMILAR
CLASSES OR RATING CATEGORIES, THE DIRECTOR OF THE
DEPARTMENT OF INSURANCE OR HIS DESIGNEE MAY
ORDER THAT INSURER TO ALTER ITS RATING OR CLASS
PLAN, OR THE FACILITY'S GOVERNING BOARD MAY
IMPOSE A THIRTY-FIVE PERCENT CESSION LIMITATION
UPON THAT CLASS OR RATING CATEGORY; AND TO
REPEAL SECTIONS 38-73-731, RELATING TO INSURANCE,
REMOVAL FROM THE YOUTHFUL DRIVER
CLASSIFICATION, AND REFUND OF EXCESS PREMIUM
PAID, 38-73-1425, RELATING TO FINAL RATE OR PREMIUM
CHARGE FOR PRIVATE PASSENGER AUTOMOBILE
INSURANCE RISK CEDED TO THE REINSURANCE FACILITY,
38-77-360, RELATING TO THE PROVISIONS PROHIBITING AN
INCREASE IN AUTOMOBILE INSURANCE PREMIUMS AFTER
CERTAIN FIRST OFFENSE VIOLATIONS, AND 38-77-610,
RELATING TO AUTOMOBILE INSURANCE AND THE FILING
OF RECOUPMENT CHARGES.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Section 38-73-10(a)(2) of the 1976 Code, as last
amended by Act 148 of 1989, is further amended to read:
"(2) empower the director or his designee to fix, establish, and
promulgate any uniform statistical plan necessary or appropriate to
obtain all automobile insurance loss and loss adjustment expense
experience, other expense experience, and all other appropriate
statistical and financial data from insurers, rating organizations, and
advisory organizations engaged in an automobile insurance business
in this State to the end that the department director or his
designee shall promulgate or approve the risk
classification and territorial plans to be used by all insurers of
automobile insurance in this State and in order that the director or his
designee may test the risk and territorial differentials previously
established against the most recently available loss experience;"
SECTION 2. Section 38-73-720 of the 1976 Code, as last amended
by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-720. The director or his designee may approve
or, through order, fix, establish, and promulgate fair and
reasonable risk classifications and territories for automobile insurance
risks in accordance with the criteria and standards mentioned in
Section 38-73-730 and consistent with the purposes of this chapter
and Chapter 77 of this title.
The A classification plan when utilized by insurers
of automobile insurance must be introduced actuarially on-balance so
that no increase in income level is produced by the filed classification
plans. Decreases for income levels are encouraged. The
classification plan must be consistent with the classification plans
approved for use on a countrywide basis by the rating organization
having the largest number of members or subscribers in South
Carolina. In addition, the director or his designee shall not permit
within the revised risk classification plan a distinction in bodily
injury liability premiums charged or property damage liability
premiums charged because of the type of private passenger
automobile insured Any risk classification or class plan
which does not result in an income level increase for an insurer must
not be considered a rate change subject to the requirements of Section
38-73-920."
SECTION 3. Section 38-73-730 of the 1976 Code, as last amended
by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-730. No distinctions are permitted nor
or may be made between policyholders or applicants for
automobile insurance as respects coverages, policy terms, rates,
premium payment arrangements, claim services, or other services
provided by the insurer directly or through its agents or employees
except as the distinctions are relevant to and reflected in
insurers' the insurer's rating classifications
or under risk and territorial classification plans promulgated
or approved by the department director or his
designee. No risk classification plan may be promulgated or
approved unless the criteria used for classifying risks are
objective, clear, and unequivocal and based upon factually or
statistically supported data, nor or unless the
classifications in the rating plan are calculated to render possible the
compilation of credible statistical data both for purposes of
determining premiums and losses and for comparing the relative
relationships between the loss or expense experience or both of the
respective classes. The legislative intent is to make it possible for the
director or his designee to determine the total profit,
or loss, and expense expenses, and
operating results of the entire line of automobile insurance and each
component thereof and of each automobile insurer transacting
insurance within the line and each component and to make price
comparisons between the rates and premium charges of the various
insurers. It is further the policy of this chapter to render possible the
evaluation by the director or his designee of the performance of the
total insurance market and to enable him thereby to assist automobile
insurance consumers in making appropriate consumer decisions."
SECTION 4. Section 38-73-737(A) and (E) of the 1976 Code,
both as added by Act 496 of 1994, are amended to read:
"(A) Premium rates charged for liability coverages and collision
coverage under a private passenger automobile insurance policy are
subject to an appropriate driver training course credit once
satisfactory evidence is presented that an applicant for the credit, who
is not subject to the youthful operator-approved driver training course
credit mandated by Regulation 69-13.2(C) regulation, by
order of the director or his designee, or within any insurer's approved
classification plan, has completed successfully an approved
driver training course. The amount of the credit may be determined
by each individual insurer based upon factually or statistically
supported data and is subject to prior approval by the
commissioner director or his designee. The credit
must be afforded to the operator for thirty-six months from the date
the approved driver training course was completed. The insurer may
require as a condition of providing and maintaining the credit,
that the insured for a three-year period after course completion not be
involved in an accident for which the insured is at fault. The credit
must be afforded by each insurer in a nondiscriminatory manner to all
applicants, other than those considered within Regulation
69-13.2(C) not subject to the youthful operator-approved
driver training course credit.
(E) Only the vehicle driven by drivers who have completed
successfully the driver training course qualifies for the insurance
credit. In order for the credit to apply, the certificate must be
furnished by the named insured, principal operator of the insured
vehicle, and all occasional operators named in the policy as
provided in Department of Insurance Regulation 69-13.1(II)(C).
Other vehicles which may be operated by other family members who
have not completed the driver training course do not qualify for the
insurance credit unless the primary driver of the additional vehicle
has successfully completed the driver training course."
SECTION 5. Section 38-73-760 of the 1976 Code, as last amended
by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-760. (a) The director or his designee, through the
State Rating and Statistical Division, shall fix, establish, and
promulgate any uniform statistical plan that may be necessary or
appropriate for the gathering and compilation of statistical data from
insurers, rating organizations, or advisory organizations transacting
or otherwise engaged engaging in the automobile
insurance business in the State. In promulgating any uniform
statistical plan, consideration may be given to the extent
reasonable or practicable to the rules and forms of the plans used for
rating systems in other states. Upon the promulgation of any
statistical plan for automobile insurance in this State, the same must
be adopted and used by every automobile insurer in this State and
every automobile insurer shall constitute the State Rating and
Statistical Division its statistical agent for automobile insurance in
this State.
(b) The statistical plan may be promulgated so as to provide for any
and all statistical and financial data necessary or appropriate to the
implementation of the policy of this chapter or Chapter 77 of this title
or to yield statistical data reasonably and fairly related to any of the
purposes of this article, including, but not limited to, the fixing,
establishing, approving, and or
promulgating of risk and territorial classification plans for automobile
insurance; determining the pure loss rate level indications for
automobile insurance in South Carolina based upon all South
Carolina loss experience and assisting in the translating of this
information into usable form for insurance consumers in terms of the
final rates or premium charges of each insurer of automobile
insurance, determining the reasonability of loss adjustment expenses,
other expenses and profit factors applied by insurers to their pure
loss components in arriving at their final rates or premium charges for
automobile insurance both for purposes of ensuring that the final
rates or premium charges are adequate, not excessive, and not
unfairly discriminatory and for ensuring that improper and undue
burdens are not imposed upon the South Carolina Reinsurance
Facility by way of excessive ceding commissions to ceding insurers;
determining the amount, validity, and propriety of class and territorial
differentials applied to the general pure loss rate levels and testing
not less than annually the appropriateness of the existing differentials
in the light of the most recent available loss experience data;
determining the amount, validity, and propriety of surcharges and
discounts referable to any uniform merit rating plan or system
which may have been promulgated or approved by the
department director or his designee or which may be
under consideration for promulgation or approval, the
appropriateness of the surcharges and discounts in the light of the
most recent available loss experience data; determining the propriety
or validity of any plan for the classification of risks which may be in
effect or under consideration based upon the propensities of motor
vehicles or classes or types of motor vehicles or their equipment to
shield occupants from death or serious injury as a result of crash or
based upon the relative invulnerability of the motor vehicles or
classes or types of motor vehicles to extensive damage as a result of
crash or their repairability at modest expense; or obtaining data
relevant to studies being made or to be made by the State Rating and
Statistical Division in connection with any of the foregoing or in
connection with means and methods for providing appropriate rates
for insurance consumers or fostering and encouraging competition
among insurers.
(c) The functions and responsibilities of the State Rating and
Statistical Division acting as statistical agent for automobile insurers
may not be delegated, except that the director may, as the result of
competitive bidding, make an agreement with some suitable person,
firm, corporation, or other organization for the gathering,
compilation, recordation, or computerization of the statistical data.
However, these functions are always subject to the supervision,
direction, and control of the director or his designee and the
examination and oversight of insurers in respect to their obligations
to furnish statistical data to him remain the direct responsibility of the
director or his designee and may never be delegated other than to the
State Rating and Statistical Division.
(d) Any merit rating plan or system promulgated by the
department pursuant to the authority contained in subsection (b)
likewise extends to and includes automobile collision insurance.
However, nothing contained in this subsection (d) requires that the
same percentage or dollar amounts for discounts or surcharges apply
to collision coverage nor does it require that surcharges already
assessed in respect to the liability coverages of the policy again be
assessed in respect to the collision coverage afforded by the same
policy.
(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.
(f)(e) All policies of automobile insurance issued
in South Carolina must show on the initial policy or on an attachment
to the initial policy and on all premium invoices or attached to all
premium invoices, in a form to be approved by the director or his
designee, the amount of any surcharge (including loss of safe driver
discount) that may be applicable to the policy as a result of any merit
rating plan or system promulgated or approved by the
department director or his designee. Also to be
included, presented in a fashion that is readily understandable, is the
reason for the applicable surcharge or the loss of safe driver discount.
The amount of the applicable safe driver discount also must be
shown.
(f) By January 1, 1998, the reinsurance facility shall file with
the director for approval a merit rating and risk classification plan to
be used by all designated carriers for business written by designated
producers. In the alternative, the facility may adopt any merit rating
and risk classification plan issued by order of the director or
approved for a licensed rating organization."
SECTION 6. Section 38-73-770 of the 1976 Code, as last amended
by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-770. Every classification plan promulgated or
approved by the department director or his
designee must be so structured as to produce rates or premium
charges which are adequate, not excessive, and not unfairly
discriminatory."
SECTION 7. Section 38-77-10(1) of the 1976 Code, as last
amended by Act 326 of 1996, is further amended to read:
"(1) To provide that every automobile insurance risk which is
insurable on the basis of the criteria established in this chapter is
entitled to bodily injury liability and property damage liability
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 classification of risk and territory under
the applicable risk and territorial classification plan promulgated
or approved by the department director or his
designee so long as all these applicants or insureds have satisfied
the same objective standards as established in Sections 38-77-280
and Section 38-73-455;"
SECTION 8. Section 38-77-120(a) of the 1976 Code, as last
amended by Section 806 of Act 181 of 1993, is further amended to
read:
"(a) No cancellation or refusal to renew by an insurer of a policy of
automobile liability insurance is effective unless the insurer
delivers or mails, to the named insured at the address shown in the
policy, a written notice of the cancellation or refusal to renew. This
notice:
(1) must be approved as to form by the director or his designee
prior to use;
(2) shall state the date not less than fifteen days after the date of
the mailing or delivering on which the cancellation or refusal to
renew becomes effective;
(3) shall state the specific reason or reasons of the insurer for
cancellation or refusal to renew."
SECTION 9. Section 38-77-285 of the 1976 Code, as amended by
Act 146 of 1991, is further amended to read:
"Section 38-77-285. All automobile insurance coverages written
by an insurer for an insured's automobile must be written in the same
policy except that all automobile insurance policies in effect on
the effective date of this section may continue in force until the
expiration date of the policy. This section applies only to
insurance policies covering vehicles eligible to be ceded to the
reinsurance facility."
SECTION 10. The 1976 Code is amended by adding:
"Section 56-5-5315. A person violating Section 56-5-5310 for a
first offense has ten days to repair a taillight if the violation was for
not having a taillight in good working order. If the person is found
to be in continuing violation of Section 56-5-5310 after the ten-day
period, he must be punished as provided by law."
SECTION 11. 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 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. .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. 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.
(A) The insurance premium charged by insurers for liability
coverage upon each private passenger automobile and for each
nonowner's policy must include a base recoupment fee. For the year
July 1, 1998, to June 30, 1999, that base recoupment fee must be
recoupment fee approved for safe drivers as of July 1, 1997.
(B) Beginning December 2, 1998, that base recoupment fee must
be reviewed annually by December second of each year by a
committee which includes the consumer advocate or his designee, the
director of the Department of Insurance or his designee, the director
of the Department of Public Safety or his designee, the director of the
Legislative Audit Council or his designee, and a South Carolina
Reinsurance Facility governing board consumer representative
elected by, and from among, the consumer representatives serving on
that governing board. That base recoupment fee must be calculated
by factoring no more than .386 against the total losses of the South
Carolina Reinsurance Facility from the preceding reinsurance facility
fiscal year. The resulting product must be divided by the number of
insured private passenger automobiles within the this State. Any data
deemed necessary for committee consideration from any individual
or entity transacting business within the State, from any state agency,
from any locality or municipality, or from the South Carolina
Reinsurance Facility must be provided upon request at reasonable
cost. If there is to be any increase in the dollar amount of the base
recoupment fee from the preceding year, then that dollar increase
must be the subject of a public hearing before the administrative law
judge division, if requested pursuant to the notice requirements of
Section 38-73-910. The administrative law judge assigned to the
public hearing must issue his final decision in the matter no later than
February first.
(C) The difference between the total base recoupment fee to be
collected and the estimated operating losses of the South Carolina
Reinsurance Facility, adjusted to reflect prudently incurred expenses
consistent with the provisions of Section 38-73-465 and the time
value of money, must be collected as a surcharge recoupment fee.
That surcharge recoupment fee must be charged by insurers for
private passenger automobiles and nonowners' policies and must be
assessed for each drivers' license point assigned, pursuant to the
Department of Public Safety's Uniform Point System for Evaluating
Operating Records of Drivers, to each operator who is an insured
under the liability insurance policy covering the private passenger
automobile or under a nonowner's policy.
(D) For the year July 1, 1998, to June 30, 1999, the surcharge
recoupment fee must be determined by February 15, 1998, by the
committee.
(E) A single conviction for a moving traffic violation which results
by law in an automatic driver's license suspension must be assessed
twenty-five surcharge recoupment fee points. A moving traffic
violation which results in drivers' license points as a result of a
conviction, guilty plea, or plea of nolo contendere on or after
November 1, 1997, must result in a surcharge recoupment fee. A
surcharge recoupment fee must be imposed only once for each
violation. There is no time limitation upon the imposition of that
surcharge recoupment fee; the surcharge recoupment fee for each
point assessed ultimately must be collected. All drivers' license
points must be surcharged unless the operator was convicted while
operating a motor vehicle not cedeable to the South Carolina
Reinsurance Facility. However, in the case of convictions for driving
under the influence of alcohol or narcotic drugs, surcharge
recoupment fee points must be assigned regardless of the type of
motor vehicle being operated at the time of violation.
(F) An accident which results in damages exceeding the thresholds
for chargeable accidents set within Section 38-73-455(A)(3) must be
assessed three surcharge recoupment fee points. Surcharge
recoupment fees for an accident and surcharge recoupment fees for
moving traffic violations arising out of a single incident may not be
totaled. The higher of the total of all applicable moving traffic
violation surcharge recoupment fees arising out of the single incident
or the accident surcharge recoupment fee must be imposed. In the
event that a conviction for a moving traffic violation occurs
subsequent to the insurer's imposition of surcharge recoupment fees
for the accident, the insurer may add the difference between the
initial accident surcharge recoupment fee and the moving traffic
violation to any premium due. Surcharge recoupment fees may not
be imposed for accidents considered not chargeable by law as a result
of the circumstances detailed within Section 38-73-455(A)(3)(a)
through Section 38-73-455(A)(3)(h). Provided, however, that the
second and each subsequent accident considered not chargeable by
law only as a result of the monetary thresholds detailed within
Section 38-73-455(A)(3) must result in one surcharge recoupment fee
point.
(G) An operator who has driven for sixty months without having
been convicted, pled guilty, or pled nolo contendere to any moving
traffic violation resulting in driver's license points or having been
involved in an accident resulting in surcharge recoupment points
must be forgiven for two surcharge recoupment fee points for his first
moving traffic violation resulting in four driver's license points or
less.
(H) Beginning February 15, 1999, the surcharge recoupment fee
must be determined by the committee no later than February fifteenth
of each year. Any data deemed necessary for committee
consideration from an individual or entity transacting business within
this State, from a state agency, locality or municipality, or the South
Carolina Reinsurance Facility must be provided upon request at
reasonable cost. If there is to be an increase in the dollar amount of
the surcharge recoupment fee from the preceding year, then that
increase must be the subject of a public hearing before the
administrative law judge division, if requested pursuant to the notice
requirements of Section 38-73-910. The administrative law judge
assigned to the public hearing must issue his final decision
determining whether or not the surcharge recoupment fee amount has
been calculated correctly no later than March thirty-first.
(I) Insurers issuing policies for insureds must assess surcharge
recoupment fees for all drivers' license points incurred by each
operator on or after November 1, 1997, unless that operator can
provide documentation that the applicable surcharge recoupment fees
were paid. Insurers must assess surcharge recoupment fees against
new applicants who were previously licensed out-of-state for all
points incurred on or after November 1, 1997, or within the twelve
months preceding the application date, whichever is less. Insurers
must assess surcharge recoupment fees against new applicants who
were previously licensed in State but who were not continuously
insured before November 1, 1997, for all points incurred on or after
November 1, 1997, or within thirty-six months preceding the
application date during which time they were uninsured, whichever
is greater. In the event that more than one operator is assigned to a
private passenger automobile, surcharge recoupment fees must be
totaled for all operators. Insured appeals of assignment of surcharge
recoupment fees pursuant to this subsection may be taken to the
director or his designee.
(J) Insurers must provide a receipt on demand to an insured if
surcharge recoupment fees have been paid to that insurer. Base
recoupment fees and surcharge recoupment fees may be advanced or
financed in conjunction with owed premiums in any manner allowed
by law for the advancing or financing of insurance premiums. Any
receipt provided must detail the amount of the surcharge recoupment
fees paid, and if the applicable surcharge recoupment fees have not
been paid in full, any amount still owed. A policy may be endorsed
at any time during a policy period to reflect surcharge recoupment
fees applicable as a result of moving traffic violations or accidents
surchargeable pursuant to this section occurring prior to the policy
inception date regardless of whether the accidents or moving traffic
violations were disclosed to the insurer at the policy inception date.
Insured appeals of insurer refunds or insurer refusals to issue receipts
on demand pursuant to this subsection may be taken to the director
or his designee.
(K) Nothing within this section precludes an insurer from utilizing
reliable accident or moving traffic violation information from sources
other than the Department of Public Safety. In the event that a
moving traffic violation for which an operator can be fined or
convicted is created which is not included within the Department of
Public Safety's Uniform Point System, the committee must set the
number of surcharge recoupment points to be factored for each
operator against the surcharge recoupment fee.
(L) A person who makes a false statement or misrepresentation
and a person who knowingly assists, abets, solicits, or conspires with
such person to avoid the proper payment of the imposition of a base
or surcharge recoupment fee must be punished as provided within
Section 38-55-540(1) through (3).
(M) The director or his designee may promulgate regulations or
issue orders necessary to implement this section."
SECTION 12. Section 38-77-620 of the 1976 Code, as 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 38-77-600
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 13. Section 38-77-910 of the 1976 Code, as 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 or approved by the
department director or his designee."
SECTION 14. Section 38-77-950 of the 1976 Code, as last amended
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 or approved by the
department, nor director or his designee or 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. However, if any insurer cedes
certain classes or rating categories which produce loss ratios to the
reinsurance facility which are greater than the statewide average for
the same or substantially similar classes or rating categories, the
director or his designee may order that insurer to alter its rating or
class plan or the facility's governing board may impose a thirty-five
percent cession limitation upon that class or rating category.
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 automobile has been ceded to 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) Section
38-73-760(d).
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."
SECTION 15. Sections 38-73-731, 38-73-1425, 38-77-360, and
38-77-610 of the 1976 Code are repealed.
SECTION 16. Except as may otherwise be specifically provided in
this act, this act takes effect upon approval by the Governor.
-----XX----- |