H*3339 Session 106 (1985-1986)
H*3339(Rat #0357, Act #0338 of 1986) General Bill, By
House Labor, Commerce and Industry
Similar(S 797, S 911, H 3234)
A Bill to amend Chapter 9, Title 38, Code of Laws of South Carolina, 1976,
relating to the conduct of insurance business, by adding Article 7 so as to
provide standards governing cancellation, nonrenewal, and renewal of property
insurance and casualty insurance coverages, including, among other things, the
establishment of unlawful acts.
01/22/86 House Introduced, read first time, placed on calendar
without reference HJ-231
01/29/86 House Debate adjourned until Tuesday, February 4, 1986 HJ-375
02/04/86 House Debate adjourned HJ-473
02/05/86 House Objection by Rep. Klapman
02/05/86 House Amended HJ-501
02/05/86 House Read second time HJ-506
02/06/86 House Read third time and sent to Senate HJ-573
02/06/86 Senate Introduced and read first time SJ-502
02/06/86 Senate Referred to Committee on Banking and Insurance SJ-50
02/11/86 Senate Recalled from Committee on Banking and Insurance SJ-529
02/12/86 Senate Read second time SJ-573
02/12/86 Senate Ordered to third reading with notice of
amendments SJ-573
02/19/86 Senate Read third time and enrolled SJ-639
03/04/86 Ratified R 357
03/05/86 Signed By Governor
03/05/86 Effective date 03/05/86
03/05/86 Act No. 338
03/12/86 Copies available
(A338, R357, H3339)
AN ACT TO AMEND CHAPTER 9, TITLE 38, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO THE CONDUCT OF INSURANCE BUSINESS, BY ADDING ARTICLE 7 SO AS TO
PROVIDE STANDARDS GOVERNING CANCELLATION, NONRENEWAL, AND RENEWAL OF PROPERTY
INSURANCE AND CASUALTY INSURANCE COVERAGES, INCLUDING, AMONG OTHER THINGS, THE
ESTABLISHMENT OF UNLAWFUL ACTS.
Be it enacted by the General Assembly of the State of South Carolina:
Cancellation, nonrenewal, and renewal of
property and casualty insurance
SECTION 1. Chapter 9 of Title 38 of the 1976 Code is amended by adding:
"Article 7
Cancellation, Nonrenewal, and Renewal
of Property Insurance and Casualty
Insurance
Section 38-9-810. This article applies to all property insurance and casualty
insurance, as defined in items (c) and (d) of Section 38-5-20, except for
automobile insurance and any other type of property or casualty insurance as to
which there are specific statutory provisions of law governing cancellation,
nonrenewal, or renewal of policies. This article further applies to policies
issued by licensed insurers and to policies issued by insurers which are
unlicensed but approved under Section 38-47-100.
Section 38-9-820. For the purposes of this article:
(1) 'Renewal' or 'to renew' means the issuance of or the offer to issue by
an insurer a policy succeeding a policy previously issued and delivered by the
same insurer or an insurer within the same group of insurers, or the issuance of
a certificate or notice extending the term of an existing policy for a specified
period beyond its expiration date.
(2) 'Nonpayment of premium' means the failure or inability of the named
insured to discharge when due any obligation in connection with the payment of
premiums on a policy of insurance subject to this article, whether such payment
is payable directly to the insurer or its agent or indirectly payable under a
premium finance plan or extension of credit.
(3) 'Cancellation' means termination of a policy at a date other than its
expiration date.
(4) 'Expiration date' means the date upon which coverage under a policy ends.
It also means, for a policy written for a term longer than one year or with no
fixed expiration date, each annual anniversary date of such policy.
(5) 'Nonrenewal' means termination of a policy at its expiration date.
Section 38-9-830. (a) No insurance policy or renewal thereof may be cancelled
by the insurer prior to the expiration of the term stated in the policy, except
for one of the following reasons:
(1) nonpayment of premium;
(2) material misrepresentation of fact which, if known to the company, would
have caused the company not to issue the policy;
(3) substantial change in the risk assumed, except to the extent that the
insurer should reasonably have foreseen the change or contemplated the risk in
writing the policy;
(4) substantial breaches of contractual duties, conditions, or warranties;
or
(5) loss of the insurer's reinsurance covering all or a significant portion
of the particular policy insured, or where continuation of the policy would
imperil the insurer's solvency or place that insurer in violation of
the insurance laws of this State. Prior to cancellation for reasons permitted
in this item (5), the insurer must notify the Commissioner, in writing, at least
sixty days prior to such cancellation and the Commissioner shall, within thirty
days of such notification, approve or disapprove such action.
(b) Cancellation under item (1) of subsection (a) of this section is not
effective unless written notice of cancellation has been delivered or mailed to
the insured and the agent of record, if any, not less than ten days prior to the
proposed effective date of cancellation. Cancellation under items (2) through
(5) of subsection (a) of this section is not effective unless written notice of
cancellation has been delivered or mailed to the insured and the agent of record,
if any, not less than thirty days prior to the proposed effective date of
cancellation. The notice 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. Any notice of cancellation shall state the precise reason
for cancellation. Proof of mailing is sufficient proof of notice.
(c) Subsections (a) and (b) of this section do not apply to any insurance
policy which has been in effect for less than ninety days and is not a renewal
of a previously existing policy. The policy may be cancelled for any reason by
furnishing to the insured at least thirty days' written notice of cancellation,
except where the reason for cancellation is nonpayment of premium, in which case
not less than ten days' written notice must be furnished.
Section 38-9-840. (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 days prior to the expiration date
of the policy.
(c) Subject to subsection (c) of Section 38-9-860, 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 days prior to the
anniversary date of the policy.
(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 38-9-850. (a) If an insurer intends to renew a policy, the insurer
shall furnish renewal terms and a statement of the amount of premium or estimated
premium due for the renewal policy period in the manner required by this section.
(b) If the policy being renewed (hereinafter 'original policy') is written for
a term of one year or less, the renewal terms and statement of premium or
estimated premium due must be furnished to the insured not less than thirty days
prior to the expiration date of the original policy.
(c) If the original policy is written for a term of more than one year or for
an indefinite term, the renewal terms and statement of premium or estimated
premium due must be furnished to the insured not less than thirty days prior to
the anniversary date of the original policy.
(d) The insurer may satisfy its obligation to furnish renewal terms and
statement of premium or estimated premium due by either of the following methods:
(1) mailing or delivering renewal terms and statement to the insured at his
address shown in the policy or, if not reflected therein, at his
last known address, not less than thirty days prior to expiration or anniversary;
or
(2) mailing or delivering renewal terms and statement to the agent of
record, if any, not less than forty-five days prior to expiration or anniversary,
along with instructions that the agent furnish the renewal terms and statement
to the insured not less than thirty days prior to expiration or anniversary.
(e) If the insurer fails to furnish the renewal terms and statement of premium
or estimated premium due in the manner required by this section, the insured may
elect to cancel the renewal policy within the thirty-day period following receipt
of the renewal terms and statement of premium or estimated premium due. Earned
premium for any period of coverage must be calculated pro rata based upon the
premium applicable to the original policy and not the premium applicable to the
renewal policy.
Section 38-9-860. (a) It is unlawful for any insurer to cancel, nonrenew, or
renew a policy of insurance except in compliance with the requirements of this
article.
(b) Midterm cancellation of an entire block, line, or class of business is
presumed to be unfair, inequitable, and contrary to the public interest and is
unlawful.
(c) If a policy has been issued for a term longer than one year and for
additional premium consideration renewal of the policy or an annual premium has
been guaranteed, it is unlawful for the insurer to refuse to renew the policy or
to increase the annual premium during the term of that policy.
Section 38-9-870. For insurers which are unlicensed but approved under Section
38-47-100, the timely giving of all notices required by this article to the
licensed broker who placed the insurance and represents the insured is considered
notice to the insured.
Section 38-9-880. There is no liability on the part of and no cause of action
of any nature may arise against the Commissioner, any insurer, or the authorized
representatives, agents, and
employees of either or any firm, person, or corporation furnishing to the insurer
information as to reasons for cancellation or refusal to write or renew, for any
statement made by any of them in complying with this article, or for the
providing of information pertaining thereto, unless the person asserting the
cause of action establishes that the person against whom the cause of action is
asserted was motivated by express malice or gross negligence."
Time effective
SECTION 2. This act shall take effect upon approval by the Governor. |