H 3637 Session 110 (1993-1994)
H 3637 General Bill, By J.G. Felder
Similar(H 3690, H 4972)
A Bill to amend Section 38-77-10, Code of Laws of South Carolina, 1976,
relating to the declaration of purpose under the State's Automobile Insurance
Law, so as to delete provisions, including reference to the South Carolina
Reinsurance Facility, provide reference to an Underwriting Association, and to
make changes to the declaration.-short title
03/04/93 House Introduced and read first time HJ-12
03/04/93 House Referred to Committee on Labor, Commerce and
Industry HJ-20
A BILL
TO AMEND SECTION 38-77-10, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO THE DECLARATION OF
PURPOSE UNDER THE STATE'S AUTOMOBILE INSURANCE
LAW, SO AS TO DELETE PROVISIONS, INCLUDING REFERENCE
TO THE SOUTH CAROLINA REINSURANCE FACILITY,
PROVIDE REFERENCE TO AN UNDERWRITING ASSOCIATION,
AND TO MAKE CHANGES TO THE DECLARATION; TO AMEND
SECTION 38-77-30, AS AMENDED, RELATING TO DEFINITIONS
UNDER THE AUTOMOBILE INSURANCE LAW, SO AS TO
DELETE THE DEFINITION OF "FACILITY" AND TO
DEFINE "UNDERWRITING ASSOCIATION", DELETE
THE DEFINITION OF "QUOTA SHARE
REINSURANCE" AND TO DEFINE "SHARED RISK
POOLING", PROVIDE A DEFINITION FOR
"ASSOCIATION STANDARD RATE" AND
"ASSOCIATION QUALIFIED RATE", CHANGE THE
DEFINITION OF "SPECIALIZED INSURER", AND
PROVIDE A DEFINITION FOR "CLEAN RISK
SUBSIDY"; TO CHANGE THE TITLE OF ARTICLE 3,
CHAPTER 77, TITLE 38 FROM "MANDATE TO WRITE AND
INSURANCE COVERAGE" TO "CERTAIN
REQUIREMENTS TO INSURE AND INSURANCE
COVERAGE"; TO CHANGE THE TITLE OF SECTION 38-77-110 FROM "INSURERS REQUIRED TO INSURE;
EXCEPTIONS" TO "PROHIBITION AGAINST
DISCRIMINATORY UNDERWRITING PRACTICES",
DELETE PROVISIONS OF THAT CODE SECTION, AS AMENDED,
AND ADD NEW PROVISIONS, INCLUDING THE PROVISION
THAT A REFUSAL TO WRITE AN AUTOMOBILE INSURANCE
POLICY MUST BE IN WRITING STATING THE CAUSE OF THE
REFUSAL IF REQUESTED BY THE APPLICANT; TO AMEND
SECTION 38-77-112, AS AMENDED, RELATING TO THE
REQUIREMENT THAT AN APPLICANT FOR AUTOMOBILE
INSURANCE OR A POLICYHOLDER IS REQUIRED TO HAVE A
DRIVER'S LICENSE AND EXCEPTIONS, SO AS TO DELETE THE
REFERENCE TO SECTION 38-77-280 AND SECTION 38-77-920;
TO AMEND SECTION 38-77-115, RELATING TO AUTOMOBILE
INSURANCE AND THE PROVISION THAT SIGNS ARE
REQUIRED IN AN AGENT'S PLACE OF BUSINESS, SO AS TO
DELETE THE PROVISIONS OF THAT SECTION, REQUIRE THAT
AUTHORIZED AGENTS FOR EVERY INSURER COVERED BY
SECTION 38-77-110 SHALL POST A SIGN WHICH IS TO BE
TITLED "PROHIBITION AGAINST DISCRIMINATORY
UNDERWRITING PRACTICES", AND PROVIDE FOR THE
CONTENTS OF THE SIGN; TO AMEND SECTION 38-77-140,
RELATING TO THE BODILY INJURY AND PROPERTY DAMAGE
LIMITS UNDER THE AUTOMOBILE INSURANCE LAW, SO AS
TO CHANGE THE AMOUNTS OF CERTAIN OF THE LIMITS; TO
AMEND SECTION 38-77-280, AS AMENDED, RELATING TO
AUTOMOBILE COLLISION COVERAGE AND COMPREHENSIVE
COVERAGE, SO AS TO, AMONG OTHER THINGS, DELETE
CERTAIN PROVISIONS AND PROVIDE THAT NO POLICY OF
INSURANCE WHICH PROVIDES AUTOMOBILE PHYSICAL
DAMAGE COVERAGE ONLY MAY BE TRANSFERRED TO THE
UNDERWRITING ASSOCIATION FOR SHARED RISK POOLING;
TO AMEND SECTION 38-77-285, AS AMENDED, RELATING TO
THE REQUIREMENT THAT ALL AUTOMOBILE COVERAGES BE
IN ONE INSURANCE POLICY, SO AS TO DELETE CERTAIN
LANGUAGE AND PROVIDE THAT WITH THE EXCEPTION OF
PRIVATE PASSENGER PHYSICAL DAMAGE COVERAGES, ANY
COVERAGE TRANSFERRED TO THE UNDERWRITING
ASSOCIATION ON A POLICY OF AUTOMOBILE INSURANCE
MUST BE TRANSFERRED FOR ALL AUTOMOBILES COVERED
UNDER THE POLICY AND THAT THIS SECTION APPLIES ONLY
TO INSURANCE POLICIES COVERING PRIVATE PASSENGER
VEHICLES AND SMALL COMMERCIAL RISKS; TO CHANGE
THE TITLE OF ARTICLE 5, CHAPTER 77, TITLE 38 FROM
"REINSURANCE FACILITY AND DESIGNATED
PRODUCERS" TO "UNDERWRITING ASSOCIATION;
SERVICING CARRIERS AND PRODUCERS"; TO AMEND
THE 1976 CODE BY ADDING SECTION 38-77-511 SO AS TO
CREATE THE NONPROFIT, UNINCORPORATED LEGAL ENTITY
KNOWN AS THE SOUTH CAROLINA AUTOMOBILE
UNDERWRITERS ASSOCIATION AND PROVIDE FOR RELATED
MATTERS; TO AMEND SECTION 38-77-520, RELATING TO THE
REQUIREMENT THAT AUTOMOBILE INSURERS MUST
BECOME MEMBERS OF THE REINSURANCE FACILITY, SO AS
TO REPLACE THE REFERENCES TO THE FACILITY WITH
REFERENCES TO THE UNDERWRITING ASSOCIATION; TO
AMEND SECTION 38-77-530, RELATING TO THE PLAN OF
OPERATION BY THE REINSURANCE FACILITY AND
APPROVAL BY THE CHIEF INSURANCE COMMISSIONER, SO
AS TO DELETE THE EXISTING PROVISIONS OF THE CODE
SECTION AND PROVIDE INSTEAD FOR THE PLAN OF
OPERATION OF THE UNDERWRITING ASSOCIATION; TO
AMEND SECTION 38-77-540, RELATING TO THE DUTIES OF
THE CEDING INSURER UNDER THE AUTOMOBILE INSURANCE
LAWS, SO AS TO DELETE THE EXISTING PROVISIONS OF THE
CODE SECTION, PROVIDE THAT THE UNDERWRITING
ASSOCIATION SHALL ACCEPT THE TRANSFER OF RISK ON
ANY POLICY OF AUTOMOBILE INSURANCE COVERING
INDIVIDUAL PRIVATE PASSENGER AND SMALL
COMMERCIAL RISKS AT THE OPTION OF AN INSURER BUT
ONLY AT THE RATE OR PREMIUM CHARGE AS DETERMINED
UNDER THE RATING PLANS ESTABLISHED BY THE
GOVERNING BOARD AND APPROVED BY THE CHIEF
INSURANCE COMMISSIONER, SUBJECT HOWEVER, TO
SECTION 38-77-950 REGARDING REASONABLE UTILIZATION
OF THE UNDERWRITING ASSOCIATION BY MEMBER
COMPANIES, AND PROVIDE FOR RELATED MATTERS; TO
AMEND SECTION 38-77-550, RELATING TO AUTOMOBILE
INSURANCE AND THE PROVISION THAT LEGAL RIGHTS OF
THE INSURED AND THE INSURER ARE NOT AFFECTED BY
REINSURANCE, SO AS TO DELETE THE EXISTING PROVISIONS
OF THE CODE SECTION AND PROVIDE FOR THE EFFECT OF
THE TRANSFER OF RISK UNDER A POLICY OF AUTOMOBILE
INSURANCE TO THE UNDERWRITING ASSOCIATION FOR
SHARED RISK POOLING; TO AMEND SECTION 38-77-560,
RELATING TO DEDUCTIONS TO A CEDING INSURER UNDER
THE AUTOMOBILE INSURANCE LAWS, SO AS TO DELETE THE
EXISTING PROVISIONS OF THE CODE SECTION AND PROVIDE
THAT AN INSURER TRANSFERRING RISKS ON AUTOMOBILE
INSURANCE POLICIES TO THE UNDERWRITING ASSOCIATION
SHALL RECEIVE CREDIT BY WAY OF DEDUCTION FROM ITS
UNEARNED PREMIUM LIABILITY AS CALCULATED IN
ACCORDANCE WITH SECTION 38-9-170, BUT BUSINESS
TRANSFERRED TO THE UNDERWRITING ASSOCIATION MAY
NOT BE DEDUCTED FOR PURPOSES OF THE LIMITATIONS OF
RISK PROVISIONS OF SECTION 38-55-30; TO AMEND SECTION
38-77-570, RELATING TO INVESTMENT AND DISTRIBUTION OF
FUNDS OF THE REINSURANCE FACILITY, SO AS TO DELETE
THE EXISTING PROVISIONS OF THE CODE SECTION AND
PROVIDE FOR THE INVESTMENT AND DISTRIBUTION OF THE
FUNDS AND RESERVES OF THE UNDERWRITING
ASSOCIATION; TO AMEND SECTION 38-77-580, AS AMENDED,
RELATING TO THE GOVERNING BOARD OF THE
REINSURANCE FACILITY, SO AS TO DELETE REFERENCES TO
THE FACILITY AND REPLACE THEM WITH REFERENCES TO
THE UNDERWRITING ASSOCIATION, AND DELETE
REFERENCES TO "DESIGNATED AGENTS" AND
REPLACE THEM WITH REFERENCES TO "SERVICING
AGENTS"; TO AMEND SECTION 38-77-585, AS AMENDED,
RELATING TO ADDITIONAL BOARD MEMBERS OF THE
REINSURANCE FACILITY, SO AS TO, AMONG OTHER THINGS,
DELETE REFERENCES TO THE REINSURANCE FACILITY AND
DESIGNATED INSURERS AND PROVIDE REFERENCES TO
UNDERWRITING ASSOCIATION CONTRACTED INSURERS; TO
AMEND SECTION 38-77-590, AS AMENDED, RELATING TO
DESIGNATED PRODUCERS UNDER THE AUTOMOBILE
INSURANCE LAWS, SO AS TO DELETE CERTAIN PROVISIONS,
ADD PROVISIONS, INCLUDING THE REQUIREMENT THAT THE
GOVERNING BOARD OF THE UNDERWRITING ASSOCIATION
CONTRACT WITH INSURERS MEETING ELIGIBILITY
REQUIREMENTS PROMULGATED BY THE BOARD TO ACT AS
SERVICING CARRIERS FOR THE WRITING OF AUTOMOBILE
INSURANCE THROUGH PRODUCERS ASSIGNED TO THE
SERVICING CARRIER BY THE BOARD, CHANGE THE
QUALIFICATIONS FOR AN APPLICANT FOR ASSIGNMENT TO
A SERVICING CARRIER, AND PROVIDE FOR RELATED
MATTERS; TO AMEND SECTION 38-77-630, AS AMENDED,
RELATING TO POLICIES CEDED TO THE REINSURANCE
FACILITY, SO AS TO DELETE REFERENCE TO THE
REINSURANCE FACILITY AND REPLACE IT WITH REFERENCE
TO THE UNDERWRITING ASSOCIATION, DELETE CERTAIN
PROVISIONS, AND PROVIDE THAT A RISK, OTHER THAN AT
RENEWAL, MAY BE TRANSFERRED TO THE UNDERWRITING
ASSOCIATION ONLY WHEN THE APPLICATION IS
ACCOMPANIED BY EITHER A RENEWAL NOTICE FROM
ANOTHER INSURER OR A MOTOR VEHICLE REPORT (MVR)
ISSUED AT THE POINT OF SALE, TOGETHER WITH THE FULL
PREMIUM CORRECTLY REFLECTING THE FACTS SHOWN ON
THE MVR OR CONSISTENT WITH THE PREMIUM QUOTED IN
THE RENEWAL NOTICE; TO AMEND SECTION 38-77-910,
RELATING TO THE AUTOMOBILE INSURANCE LAWS AND
UNLAWFUL DISTINCTIONS BETWEEN POLICYHOLDERS OR
APPLICANTS, SO AS TO PROVIDE, AMONG OTHER THINGS,
THAT ANY VIOLATION OF THIS CODE SECTION OR THE
PROHIBITION AGAINST DISCRIMINATORY UNDERWRITING
PRACTICES AS DESCRIBED UNDER SECTION 38-77-110 MAY
BE CAUSE FOR REVOCATION OR SUSPENSION OF THE
INSURER'S OR AGENT'S LICENSE BY THE CHIEF INSURANCE
COMMISSIONER; TO AMEND SECTION 38-77-920, AS
AMENDED, RELATING TO THE PROVISION THAT
AUTOMOBILE INSURERS AND AGENTS MAY NOT REFUSE
ACCEPTANCE OF INSURANCE, THE PROPERTY RIGHTS OF
CERTAIN AGENTS, AND THE RESTRICTION OF MAILINGS TO
CERTAIN AREAS, SO AS TO DELETE CERTAIN PROVISIONS; TO
AMEND SECTION 38-77-940, RELATING TO THE AUTOMOBILE
INSURANCE LAWS, AVOIDING CERTAIN CLASSES OR TYPES
OF RISKS, EXCEPTIONS, AND CANCELING AN AGENT'S
REPRESENTATION, SO AS TO, AMONG OTHER THINGS,
DELETE CERTAIN LANGUAGE AND PROVISIONS AND
REPLACE THE REFERENCES TO THE REINSURANCE FACILITY
WITH REFERENCES TO THE UNDERWRITING ASSOCIATION;
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 POLICY IS IN THE FACILITY, SO AS TO DELETE
CERTAIN PROVISIONS, REPLACE REFERENCES TO THE
FACILITY WITH REFERENCES TO THE UNDERWRITING
ASSOCIATION INSTEAD, AND ADD PROVISIONS, INCLUDING
THE PROVISION FOR MAKING A PRIMA FACIE CASE OF
EXCESSIVE OR UNREASONABLE UTILIZATION; TO AMEND
SECTION 38-77-960, RELATING TO AUTOMOBILE INSURANCE
AGENT'S BUSINESS, SO AS TO DELETE THE EXISTING
PROVISIONS OF THAT CODE SECTION AND ADD PROVISIONS,
INCLUDING THE PROVISION THAT WHEN DEALING WITH THE
AGENTS OF THE COMPANY, WHO ARE LICENSED TO SELL
AUTOMOBILE INSURANCE, THE COMPANY MAY NOT USE
ANY BUSINESS TRANSFERRED TO THE UNDERWRITING
ASSOCIATION IN DETERMINING THE PROFITABILITY OF
THAT AGENT'S BUSINESS; TO AMEND SECTION 38-73-10, AS
AMENDED, RELATING TO THE DECLARATION OF PURPOSE
AND CONSTRUCTION OF CHAPTER 73 OF TITLE 38, DEALING
WITH PROPERTY, CASUALTY, INLAND MARINE, AND SURETY
RATES AND RATEMAKING ORGANIZATIONS, SO AS TO
DELETE REFERENCE TO THE REINSURANCE FACILITY AND
REPLACE IT WITH REFERENCE TO THE SOUTH CAROLINA
AUTOMOBILE UNDERWRITERS ASSOCIATION; TO AMEND
SECTION 38-73-455, AS AMENDED, RELATING TO
AUTOMOBILE INSURANCE RATES, SO AS TO DELETE THE
EXISTING PROVISIONS OF THAT CODE SECTION, AND ADD
PROVISIONS, INCLUDING A PROVISION THAT AN
AUTOMOBILE INSURER SHALL FILE AND OFFER FOR
AUTOMOBILE INSURANCE A RATE AS DEFINED IN SECTION
38-73-457, WHICH RATE IS SUBJECT TO ALL SURCHARGES OR
DISCOUNTS, IF ANY, APPLICABLE UNDER ANY APPROVED
MERIT RATING PLAN, CREDIT OR DISCOUNT PLAN
PROMULGATED OR APPROVED BY THE CHIEF INSURANCE
COMMISSIONER AND IS SUBJECT TO THE APPLICATION OF
THE CLEAN RISK SUBSIDY AS DEFINED IN CHAPTER 77 OF
TITLE 38; TO AMEND SECTION 38-73-457, RELATING TO
INSURANCE CASUALTY AND SURETY RATES, FILING
INFORMATION ON BASE RATES, AND THE EFFECTIVE DATE
OF RATES, SO AS TO, AMONG OTHER THINGS, DELETE
CERTAIN PROVISIONS AND ADD PROVISIONS, INCLUDING A
PROVISION THAT EVERY AUTOMOBILE INSURER AND
RATING ORGANIZATION SHALL FILE WITH THE CHIEF
INSURANCE COMMISSIONER A RATE FOR AUTOMOBILE
INSURANCE BY COVERAGE CALCULATED SOLELY UPON THE
EXPERIENCE GENERATED BY THE INSURER IN ITS BOOK OF
BUSINESS AND WHICH MUST NOT INCLUDE EXPERIENCE
GENERATED BY RISKS TRANSFERRED TO THE
UNDERWRITING ASSOCIATION FOR SHARED RISK POOLING,
AND INCLUDING A PROVISION THAT EFFECTIVE MARCH 1,
1994, THE COMMISSIONER SHALL DISALLOW THE FURTHER
USE OF THE OBJECTIVE STANDARDS RATE PREVIOUSLY
FILED IN ACCORDANCE WITH THIS SECTION; TO AMEND
SECTION 38-73-460, RELATING TO INSURANCE CASUALTY
AND SURETY RATES AND THE EFFECT OF GAINS AND LOSSES
INCURRED BY MEMBERS ON RATES, SO AS TO DELETE THE
REFERENCE TO THE REINSURANCE FACILITY AND REPLACE
IT WITH REFERENCE TO THE AUTOMOBILE UNDERWRITERS
ASSOCIATION; TO AMEND SECTION 38-73-520, RELATING TO
INSURANCE CASUALTY AND SURETY RATES AND THE
REQUIREMENT OF RATE FILINGS, SO AS TO PROVIDE FOR
THE EXCEPTION OF AN INSURER'S USE OF THE RATE PLANS
OF THE AUTOMOBILE UNDERWRITERS ASSOCIATION
PURSUANT TO SECTIONS 38-73-455 AND 38-73-457; TO AMEND
SECTION 38-73-735, AS AMENDED, RELATING TO THE STATE
RATING AND STATISTICAL DIVISION AND THE PLAN FOR
CREDITS AND DISCOUNTS, SO AS TO DELETE THE PROVISION
THAT IF AN INSURANCE CREDIT OR DISCOUNT PLAN IS
GIVEN TO AN INSURED PURSUANT TO THIS SECTION, THE
POLICY MAY BE CEDED TO THE REINSURANCE FACILITY IN
ACCORDANCE WITH THE FACILITY'S PLAN OF OPERATION;
TO AMEND SECTION 38-73-750, AS AMENDED, RELATING TO
THE STATE RATING AND STATISTICAL DIVISION, THE
REQUIREMENT THAT PLANS MUST BE FILED BY INSURERS,
THE PROVISION THAT CERTAIN PLANS MAY NOT BE FILED
OR APPROVED, AND THE DISAPPROVAL OF PLANS BY THE
CHIEF INSURANCE COMMISSIONER, SO AS TO DELETE
CERTAIN LANGUAGE, INCLUDING THE REFERENCE TO THE
SOUTH CAROLINA REINSURANCE FACILITY AND REPLACE
THAT REFERENCE WITH A REFERENCE TO THE SOUTH
CAROLINA AUTOMOBILE UNDERWRITERS ASSOCIATION; TO
AMEND SECTION 38-73-760, AS AMENDED, RELATING TO THE
STATE RATING AND STATISTICAL DIVISION AND UNIFORM
STATISTICAL PLANS, SO AS TO DELETE CERTAIN LANGUAGE,
INCLUDING REFERENCE TO THE REINSURANCE FACILITY; TO
AMEND SECTION 38-73-920, RELATING TO INSURANCE RATES,
RATE MAKING, RATE FILING, AND THE PROVISION THAT NO
INSURANCE MAY BE ISSUED EXCEPT ON RATES FILED, SO AS
TO ADD CERTAIN REFERENCES TO SECTIONS 38-73-455 AND
38-73-457 AS PERTAINING TO UTILIZATION OF THE
UNDERWRITING ASSOCIATION RATE PLANS BY INSURERS;
TO AMEND SECTION 38-73-1420, RELATING TO INSURANCE
RATING ORGANIZATIONS, THE REQUIREMENT THAT THE
BOARD OF GOVERNORS OF THE REINSURANCE FACILITY
SHALL FILE THE EXPENSE COMPONENT, AND USE OF THE
COMPONENT AFTER APPROVAL, SO AS TO DELETE THE
EXISTING PROVISIONS OF THAT CODE SECTION AND ADD
PROVISIONS, INCLUDING A PROVISION REQUIRING THE
BOARD OF GOVERNORS OF THE SOUTH CAROLINA
AUTOMOBILE UNDERWRITERS ASSOCIATION TO FILE AN
EXPENSE COMPONENT FOR RATE OR PREMIUM CHARGES
DEVELOPED UNDER RATE PLANS APPROVED BY THE CHIEF
INSURANCE COMMISSIONER, AND INCLUDING A PROVISION
THAT AUTOMOBILE INSURERS CONTRACTED TO THE SOUTH
CAROLINA AUTOMOBILE UNDERWRITERS ASSOCIATION
PURSUANT TO SECTION 38-77-590(a) AND ALL INSURERS ON
POLICIES OF AUTOMOBILE INSURANCE TRANSFERRED TO
THE UNDERWRITING ASSOCIATION FOR SHARED RISK
POOLING SHALL UTILIZE THE FINAL RATE OR PREMIUM
CHARGES UNDER THE APPLICABLE RATE PLAN APPROVED
BY THE CHIEF INSURANCE COMMISSIONER FOR THE
UNDERWRITING ASSOCIATION COMPRISING THESE FILED
RATES; TO REQUIRE THE CHIEF INSURANCE COMMISSIONER
TO CONDUCT A STUDY TO DETERMINE WHETHER THERE
ARE MORE EQUITABLE TERRITORIES IN THIS STATE, WHERE
PRIVATE PASSENGER AUTOMOBILE INSURERS COMPETE,
THAN NOW EXIST WHICH WOULD ALLOW A GREATER
DEGREE OF OPEN-MARKET COMPETITION; TO PROVIDE THAT
ANY PERSON WHO SHALL OPERATE OR ALLOW AN
UNINSURED MOTOR VEHICLE TO BE OPERATED SHALL
SUFFER THE IMMEDIATE IMPOUNDMENT OF SUCH VEHICLE
UNTIL SUCH TIME AS HE POSTS LIABILITY INSURANCE IN
THE AMOUNT REQUIRED BY CHAPTER 77, TITLE 38, AND
PAYS ANY STORAGE AND IMPOUNDMENT FEES, TOGETHER
WITH ANY OTHER FINES OR FEES IMPOSED FOR THE
OPERATION OF AN UNINSURED MOTOR VEHICLE; TO
REQUIRE THE CHIEF INSURANCE COMMISSIONER BY A
CERTAIN DATE TO PRESENT IN WRITING TO THE GOVERNOR
AND THE GENERAL ASSEMBLY A PROPOSED UNIFORM
MERIT RATING PLAN AS AUTHORIZED UNDER SECTION 38-73-760 WITH SURCHARGES COMPUTED AS A PERCENT OF THE
PREMIUM, BUT IN ALL OTHER ASPECTS CONFORMING IN
PRINCIPLE TO THE EXISTING MERIT RATING PLAN; AND TO
REPEAL SECTIONS 38-73-1410, RELATING TO INSURANCE
RATING ORGANIZATIONS AND THE PROVISION THAT THE
REFILING OF FINAL RATES OR PREMIUM CHARGES
PREVIOUSLY APPROVED IS NOT REQUIRED, 38-73-1425,
RELATING TO INSURANCE RATING ORGANIZATIONS AND
THE PROVISIONS REGARDING THE FINAL RATE OR PREMIUM
CHARGE FOR PRIVATE PASSENGER AUTOMOBILE
INSURANCE RISK CEDED TO THE REINSURANCE FACILITY,
38-77-111, RELATING TO AUTOMOBILE INSURANCE POLICIES
WHICH MAY BE CEDED TO THE REINSURANCE FACILITY, 38-77-510, RELATING TO THE REINSURANCE FACILITY, 38-77-595,
RELATING TO THE REINSURANCE FACILITY AND
CONDITIONS FOR DESIGNATION OF OTHERWISE INELIGIBLE
APPLICANTS FOR DESIGNATION, 38-77-600, RELATING TO THE
REINSURANCE FACILITY RECOUPMENT CHARGE, 38-77-605,
RELATING TO THE REQUIREMENT THAT THE FACILITY
RECOUPMENT CHARGE BE DISPLAYED, 38-77-610, RELATING
TO AUTOMOBILE INSURANCE AND THE FILING OF
RECOUPMENT CHARGES, 38-77-620, RELATING TO THE
INCLUSION OF RECOUPMENT CHARGES IN AUTOMOBILE
INSURANCE RATES, AND 38-77-625, RELATING TO
AUTOMOBILE INSURANCE AND THE PROVISION THAT THERE
SHALL BE NO INCREASE IN THE RECOUPMENT CHARGE
UNDER CERTAIN CONDITIONS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-77-10 of the 1976 Code is amended to read:
"Section 38-77-10. In order to effect a complete reform of
automobile insurance and insurance practices in South Carolina, the
purposes of this chapter are: (1) To provide that every automobile
insurance risk which is insurable on the basis of the criteria established
in this chapter is entitled to automobile insurance from the automobile
insurer of the applicant's choice on the basis of the same rates, policy
forms, claims service, and other services provided by the insurer to all
other applicants or insureds falling within the classification of risk and
territory under the applicable risk and territorial classification plan
promulgated by the Commissioner so long as all these applicants or
insureds have satisfied the same objective standards as established in
Sections 38-77-280 and 38-73-455; To provide that automobile
insurance risks may not be rejected, canceled, or non-renewed based on
anything other than objective criteria.
(2) To provide a Reinsurance Facility an Underwriting
Association for automobile insurers in which all automobile
insurers must participate to the end that the operating expenses and net
profit or loss of the Facility Association may be shared
equitably by all the insurers transacting automobile insurance business
in this State giving appropriate consideration to degrees of utilization of
the Facility Association by the several insurers of
automobile insurance and to provide prohibitions or penalties in respect
to excessive utilization of the Facility Association.
(3) To provide prohibitions and penalties in respect to unfairly
discriminatory or unfairly competitive practices having as their purpose
or effect evasion of the statutory mandate of coverage provided in this
chapter or imposing an undue or unfair burden upon other automobile
insurers through excessive utilization of the Facility To provide
prohibitions and penalties in respect to unfairly discriminatory or
unfairly competitive practices. (4) To provide medical,
surgical, funeral, and disability insurance benefits without regard to fault
to be offered under automobile insurance policies that provide bodily
injury and property damage liability insurance, or other security, for
motor vehicles registered in this State."
SECTION 2. Section 38-77-30(5) of the 1976 Code is amended to
read:
"(5) "Facility" means the unincorporated,
nonprofit, legal entity created by this chapter to reinsure policies of
automobile insurance known as the South Carolina Reinsurance
Facility. `Underwriting Association' means the unincorporated,
nonprofit, legal entity created by this chapter for shared risk pooling of
policies of automobile insurance known as the South Carolina
Automobile Underwriters Association."
SECTION 3. Section 38-77-30(9) of the 1976 Code is amended to
read:
"(9) "Quota share reinsurance" means that
form of reinsurance in which the reinsurer assumes a fixed percentage
of the insured risk. `Shared risk pooling' means that method
used by member insurers of the Underwriting Association in accordance
with the plan of operation to transfer risks via a one hundred percent
quota share reinsurance agreement to a common pool of shared market
consumers."
SECTION 4. Section 38-77-30 of the 1976 Code is amended by
adding:
"(9.5) `Association standard rate' means the final rate or
premium charge for private passenger automobile insurance, including
applicable safe driver discount for drivers with no merit rating plan
points, determined by increasing the pure loss component filed by the
insurance services office (ISO) twenty-five percent and adding the
resultant pure loss component to the expense component filed by the
Board of Governors of the Underwriting Association.
(10.5) `Association qualified rate' means the final rate or premium
charge, including applicable safe driver discount for drivers with no
merit rating plan points, determined by calculating the average of the
pure loss components filed for private passenger automobile insurance
by the ten largest writers of that type of insurance in South Carolina and
adding the expense component filed by the governing board of the
underwriting association. Private passenger automobile insurance
transferred by an insurer to the underwriting association shall not be
included when determining the ten largest writers of that type of
insurance for the purpose of this calculation; and additionally, in
situations where an insurer which is determined to be one of the ten
largest writers has multiple rate filings, only the lowest pure loss
component shall be used in the calculation."
SECTION 5. Section 38-77-30(12) of the 1976 Code is amended to
read:
"(12) `Specialized insurer' means an insurer which specializes
in certain types of business such as, but without limitation on the
generality, commercial automobile business, and which may be relieved,
with the approval of the commissioner, of the obligation to write types
of business inconsistent with this specialty, such as private passenger
automobile business. However, no insurer may be approved as a
specialized insurer or continue to be so approved unless it accepts all
insurable risks falling within the types of business to which it confines
its writings without distinctions among applicants or policyholders as to
policy forms, terms, rates, or services other than as the
distinctions are reflected in the approved rating plan for the
classification of risks. No insurer may be approved as a specialized
insurer because it specializes in or purports to specialize in select or
preferred risks. A specialized insurer may not cede risks to the
Reinsurance Facility and thus does not recoup losses of the Facility
A specialized insurer may not transfer risks to the Underwriting
Association and is exempt from participating as a member
company. Specialized insurers may be excused from using the
merit rating plan and the uniform classification and territorial plans upon
approval by the commissioner."
SECTION 6. Section 38-77-30 of the 1976 Code is amended by
adding:
"(15) `Clean risk subsidy' means (1) the amount, not to exceed
forty dollars, determined annually by the Board of Governors of the
Underwriting Association to be added and included in the final rate or
premium charge per insured vehicle, which is collected by an insurer for
payment to the underwriting association on all individual private
passenger automobile risks and small commercial risks underwritten by
the insurer in South Carolina, and (2) on risks to which one or more
merit rating plan points apply, the inclusion of an additional amount
necessary to cover or recover net losses of the underwriting association
in accordance with the plan of operation which amount is determined as
a percent of the final rate or premium charge earned per vehicle."
SECTION 7. The title of Article 3, Chapter 77, Title 38 of the 1976
Code is amended to read:
"MANDATE TO WRITE AND INSURANCE
COVERAGE CERTAIN REQUIREMENTS TO INSURE AND
INSURANCE COVERAGE".
SECTION 8. The title of Section 38-77-110 of the 1976 Code is
amended to read:
"Insurers required to insure; exceptions Prohibition
against discriminatory underwriting practices."
SECTION 9. Section 38-77-110 of the 1976 Code, as last amended by
Act 148 of 1989, is further amended to read:
"Section 38-77-110. (A) Automobile insurers other than
insurers designated and approved as specialized insurers by the
commissioner may not refuse to write or renew automobile insurance
policies for individual private passenger automobiles or small
commercial risks. These policies may not be canceled except for
reasons which had they existed or been known when the policy was
written would have rendered the risk not an insurable risk. Every
automobile insurance risk constitutes an insurable risk unless the
operator's permit of the named insured has been revoked or suspended
and is at the time of application for insurance so revoked or suspended.
However, no insurer is required to write or renew automobile insurance
on any risk if there exists a valid and enforceable outstanding judgment
secured by an insurer, an agent, or licensed premium service company
on account of automobile insurance premiums which the applicant or
insured or any principal operator who is a member of the named
insured's household has failed or refused to pay unless the applicant or
insured pays in advance the entire premium for the full term of the
policy sought to be issued or renewed or the annual premium, whichever
is the lesser. With the exception of insurers designated and
approved as specialized insurers by the commissioner, no automobile
insurer or agent may refuse to write, cancel, or nonrenew any policy,
coverage, or endorsement of automobile insurance for individual private
passenger automobile risks and small commercial risks as defined in
Section 38-77-30 solely because of the age, sex, marital status, race,
religion, national origin, type of employment, or place of residence of
any applicant for insurance or any existing insured. A refusal to write
an automobile insurance policy must be in writing stating the cause of
the refusal if requested by the applicant. An insurer is not
precluded from effecting cancellation of an automobile insurance policy,
either upon its own initiative or at the instance of an agent or licensed
premium service company, because of the failure of any named insured
or principal operator to pay when due any automobile insurance
premium or any installment payment. However, notice of cancellation
for nonpayment of premium notifies the person to whom the notice is
addressed that the notice is void and ineffective if payment of the full
amount of the premium or premium indebtedness, whichever is the
greater, is made to the insurer, agent, or licensed premium service
company named in the notice by the otherwise effective date of
cancellation; except that in circumstances of non-payment of the
premium, or payment as part of an installment or premium finance plan,
made to the insurer, agent, or premium service company where the
insurer, agent, or premium service company has notified the person by
first class, certified mail of its inability to collect said premium or
payment utilizing the financial instrument provided by the person, the
notice of cancellation notifies the person by reason of the above that the
policy and coverage is canceled at the date and time such premium or
payment was due. This notice of cancellation is not considered
ineffective for being conditional, ambiguous, or indefinite.
(B) Notwithstanding subsection (A) of this section, no insurer is
required to write private passenger automobile insurance with higher
limits of coverage than:
(1) two hundred fifty thousand dollars, for bodily injury liability
to one person in one accident,
(2) subject to the limit for one person, five hundred thousand
dollars because of bodily injury to two or more persons in one accident,
(3) fifty thousand dollars because of injury to or destruction of
property of others in any one accident,
(4) five hundred thousand dollars combined single limits for
either or both bodily injury and property damage, if any applicant or
existing policyholder, on renewal, for a motor vehicle customarily
operated by an individual, either the named insured or any other operator
not excluded in accordance with Section 38-77-340 and who resides in
the same household, has one or more of the conditions or factors
prescribed in Section 38-73-455(A) existing and if an insurer, at its
option, writes such a policy, the policy may not be ceded to the
Reinsurance Facility Notwithstanding Section 38-77-110(A), an
automobile insurance policy which has been in effect for less than sixty
days and is not a renewal of a previously existing policy, may be
canceled for any objective 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. This section does not apply to
policies transferred to the underwriting association for shared risk
pooling.
(C) With regard to any coverage not required to be written by an
insurer under the mandate to write, no insurer may refuse to write such
policy, coverage, or endorsement of automobile insurance because of the
race, color, creed, national origin, or ancestry of anyone who seeks to
become insured The provisions of Article 9 of Chapter 75
regarding cancellation, non-renewal and renewal of insurance policies
which are not inconsistent with the purposes of this chapter, and
specifically Sections 38-77-10, 38-77-110, and 38-77-590, shall be
applicable."
SECTION 10. Section 38-77-112 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-77-112. Notwithstanding Sections
Section 38-77-110, 38-77-920, and 38-77-280, no
automobile insurer is required to write coverage for automobile
insurance as defined in Section 38-77-30 for any applicant or existing
policyholder who does not at the time of application or renewal possess
a valid South Carolina motor vehicle or special restricted driver's
license. This section does not apply to an individual who is handicapped
and who owns a vehicle in this State but who does not have a valid
driver's license. If an automobile is principally garaged and operated in
this State, the owner of the vehicle must be offered coverage thereon
regardless of whether or not he possesses a valid South Carolina driver's
license if he designates to the insurer who the principal operator of the
vehicle will be and this person has a valid South Carolina driver's license
or otherwise meets the requirements of this section. This requirement
does not apply to personnel of the Armed Forces of the United States on
active duty and officially stationed in this State who possess a valid
motor vehicle driver's license issued by another state or territory of the
United States or the District of Columbia. This requirement is waived
ninety days for individuals who move into South Carolina with the intent
of making South Carolina their place of residence if they possess a valid
driver's license issued by another state or territory of the United States
or the District of Columbia."
SECTION 11. Section 38-77-115 of the 1976 Code is amended to
read:
"Section 38-77-115. The authorized agents for every
insurer covered by the provisions of Section 38-77-110 shall post in a
conspicuous location in their office or place of business a sign
containing language to be required by regulation of the Chief Insurance
Commissioner that stipulates that insurer and agent may not refuse to
write or renew that type of insurance, that tactics designed to avoid
writing or renewing that type of insurance are not permissible including
unreasonable delays in meeting with applicants, and that violations of
the above should be reported to the commission for appropriate
action. The authorized agents for every insurer covered by the
provisions of Section 38-77-110 shall post in a conspicuous location in
their office or place of business a sign which is to be titled `Prohibition
Against Discriminatory Underwriting Practices' and to read as follows:
`NO INSURER OR AGENT MAY REFUSE TO WRITE, CANCEL,
OR NONRENEW ANY POLICY, COVERAGE, OR ENDORSEMENT
OF AUTOMOBILE INSURANCE FOR INDIVIDUAL PRIVATE
PASSENGER AUTOMOBILE RISKS BECAUSE OF THE AGE, SEX,
MARITAL STATUS, RACE, RELIGION, NATIONAL ORIGIN,
EMPLOYMENT, OR PLACE OF RESIDENCE OF ANY APPLICANT
FOR INSURANCE OR ANY EXISTING POLICYHOLDER. A
REFUSAL TO WRITE AN AUTOMOBILE INSURANCE POLICY
MUST BE IN WRITING STATING THE CAUSE OF THE REFUSAL
IF REQUESTED BY THE APPLICANT.'"
SECTION 12. Section 38-77-140 of the 1976 Code is amended to
read:
"Section 38-77-140. No automobile insurance policy may be
issued or delivered in this State to the owner of a motor vehicle or may
be issued or delivered by an insurer licensed in this State upon any
motor vehicle then principally garaged or principally used in this State,
unless it contains a provision insuring the persons defined as insured
against loss from the liability imposed by law for damages arising out of
the ownership, maintenance, or use of these motor vehicles within the
United States or Canada, subject to limits exclusive of interest and costs,
with respect to each motor vehicle, as follows: fifteen
ten thousand dollars because of bodily injury to one person in
any one accident, and, subject to the limit for one person, thirty
twenty thousand dollars because of bodily injury to two or more
persons in any one accident, and five thousand dollars because of injury
to or destruction of property of others in any one accident. Nothing in
this article prevents an insurer from issuing, selling, or delivering a
policy providing liability coverage in excess of these
requirements."
SECTION 13. Section 38-77-280 of the 1976 Code, as last amended
by Act 113 of 1991, is further amended to read:
"Section 38-77-280. (A) Except as provided in subsection
(B), all automobile insurers, including those insurance companies
writing private passenger physical damage coverages only, shall make
collision coverage and either comprehensive or fire, theft, and combined
additional coverage available to an insured or qualified applicant who
requests the coverage.
Collision coverage must have a mandatory deductible of two hundred
fifty dollars, but an insured or qualified applicant, at his option, may
select an additional deductible in appropriate increments up to one
thousand dollars.
Comprehensive coverage or fire, theft, and combined additional
coverages must have a mandatory deductible of two hundred fifty
dollars, but an insured, at his option, may select an additional deductible
in appropriate increments up to one thousand dollars. This deductible
does not apply to auto safety glass. It is an unfair trade practice, as
described in Sections 38-57-30 and 38-57-40, for an insurer or an agent
to sell collision insurance, comprehensive coverage, or fire, theft, and
combined additional coverages unless the insured is notified at the time
of application of the savings which may be realized if the applicant or
the insured selects a higher deductible. This notice is required only at
the time of the initial sale and must be in a form approved by the Chief
Insurance Commissioner. An insurer may offer insureds lower
collision and comprehensive deductibles at the insurer's option.
(B) Notwithstanding subsection (A) and Sections 38-77-110
and 38-77-920, automobile insurers may refuse to write automobile
physical damage insurance coverage, including automobile
comprehensive physical damage, collision, fire, theft, and combined
additional coverage, for any applicant or existing policyholder, on
renewal, for a motor vehicle customarily operated by an individual,
either the named insured or any other operator not excluded in
accordance with Section 38-77-340 and who resides in the same
household, where one or more of the conditions or factors prescribed in
Section 38-73-455 exist. In addition, automobile insurers may refuse to
write physical damage insurance coverage to any applicant or existing
policyholder, on renewal, who has collected benefits provided under any
automobile insurance physical damage coverage during the thirty-six
months immediately preceding the effective date of coverage, for two or
more total fire losses or two or more total theft losses. No
policy of insurance which provides automobile physical damage
coverage only may be transferred to the Underwriting Association for
shared risk pooling.
(C) Notwithstanding Section 38-77-110, automobile
physical damage coverage in an automobile insurance policy may be
canceled at any time during the policy period by reason of the factors or
conditions described in Section 38-73-455(A) or Section 38-77-280(B)
which existed before the commencement of the policy period and which
were not disclosed to the insurer at the commencement of the policy
period. Insurers of automobile insurance may charge an
additional rate for private passenger physical damage insurance
coverages which rate is different from that provided for in Sections 38-73-455, 38-73-457, and 38-77-540, if the physical damage coverage rate
is filed and approved by the Chief Insurance Commissioner.
(D) No policy of insurance which provides automobile physical
damage coverage only may be ceded to the facility.
(E) Insurers of automobile insurance may charge a rate for
physical damage insurance coverages different than those provided for
in Section 38-73-457 if the rates are filed and approved by the Chief
Insurance Commissioner. Any applicant or existing policyholder, to be
charged this different rate, must be denied the coverage pursuant to
subsection (B) at the rate provided in Section 38-73-457.
(F) A carrier may not cede collision coverage, comprehensive
coverage, or fire, theft, and combined additional coverages with a
deductible of less than two hundred fifty dollars. An insured or qualified
applicant may select an additional deductible in appropriate increments
up to one thousand dollars. However, the mandatory deductible does not
apply to safety glass."
SECTION 14. Section 38-77-285 of the 1976 Code, as last 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.
With the exception of private passenger physical damage coverages,
any coverage transferred to the underwriting association on a policy of
automobile insurance must be transferred for all automobiles covered
under the policy. This section applies only to insurance policies
covering private passenger vehicles and small commercial
risks."
SECTION 15. The title of Article 5, Chapter 77, Title 38 of the 1976
Code is amended to read:
"REINSURANCE FACILITY AND DESIGNATED
PRODUCERS UNDERWRITING ASSOCIATION;
SERVICING CARRIERS AND PRODUCERS".
SECTION 16. The 1976 Code is amended by adding:
"Section 38-77-511. There is created a nonprofit,
unincorporated legal entity known as the South Carolina Automobile
Underwriters Association which is subject to regulations and orders
promulgated by the commissioner which are not inconsistent with the
purposes of this chapter. The Underwriting Association shall accept at
the option of the automobile insurer, and subject to the provisions of this
chapter, the risk covered under any policy of automobile insurance.
Except as provided under Section 38-77-285, an insurer transferring a
risk to the Underwriting Association shall transfer the risk as a unit and
may not transfer certain coverages while retaining others. No insurer
may transfer private passenger automobile insurance to the Underwriting
Association with higher limits of coverage than: (1)two hundred fifty
thousand dollars, for bodily injury liability to one person in one
accident, (2) subject to the limit for one person, five hundred thousand
dollars because of bodily injury to two or more persons in one accident,
(3) one hundred thousand dollars because of injury to or destruction of
property of other in any one accident, and (4) five hundred thousand
dollars combined single limits for either or both bodily injury and
property damage.
At the effective date of this section, the Underwriting Association
shall assume all assets, liabilities, accounts, and contracts of the former
South Carolina Reinsurance Facility, and its prior rules and regulations
are adopted and effective until any relevant changes are approved by the
governing board of the Underwriting Association. Additionally, the
governing board members of the former Reinsurance Facility at the
effective date of this section immediately become the members of the
governing board of the Underwriting Association to serve until the
expiration of their prior appointment. Insurers who were members of the
former Reinsurance Facility at the effective date of this section
immediately become participating members of the Underwriting
Association as required under Section 38-77-520 with any and all
obligations to the former Reinsurance Facility to continue with the
Underwriting Association.
Any assumed, outstanding operating deficit of the former South
Carolina Reinsurance Facility at the effective date of this section must
be recouped as provided by law and regulation prior to the effective date
of this section, with the exception that the governing board of the
Underwriting Association may develop and implement a plan to level
remaining recoupment charges and extend the recoupment period. The
recoupment amount shall continue to be displayed separately on policies
and premium notices but with the addition of a statement determined by
the governing board of the anticipated date that recoupment of losses of
the former South Carolina Reinsurance Facility will terminate. Any
assumed operating surplus will be retained by the Underwriting
Association."
SECTION 17. Section 38-77-520 of the 1976 Code is amended to
read:
"Section 38-77-520. No automobile insurer may be licensed
to transact automobile insurance in this State unless it becomes a
participating member of the Facility Underwriting
Association with respect to automobile insurance and thereafter
continues participation so long as it transacts automobile insurance in
this State. Every member is bound by the plan of operation of the
Facility Underwriting Association as approved or
promulgated by the commissioner and by any rules the governing board
of the Facility Underwriting Association lawfully
prescribes.
If the authority of an insurer to transact automobile insurance in this
State terminates for any reason its obligations as a member of the
Facility Underwriting Association nevertheless continue
until all obligations have been fulfilled and the commissioner has so
found and certified to the governing board of the Facility
Underwriting Association.
If an insurer merges into or consolidates with another insurer
authorized to transact automobile insurance in this State, or another
insurer authorized to transact automobile insurance in this State has
reinsured the insurer's entire automobile insurance business in this State,
both the insurer and its successor or the assuming reinsurer, as the case
may be, are liable for the insurer's obligations in respect to the
Facility Underwriting Association.
Any unsatisfied net liability to the Facility Underwriting
Association of an insolvent insurer which is a member of the
Facility Underwriting Association must be assumed by
and apportioned among the remaining members in the same manner in
which assessments or gain and loss are apportioned. The
Facility Underwriting Association thereupon acquires
and has all rights and remedies allowed by law in behalf of the
remaining members against the estate or funds of the insolvent insurer
for sums due the Facility Underwriting
Association."
SECTION 18. Section 38-77-530 of the 1976 Code is amended to
read:
"Section 38-77-530. The plan of operation of the Facility
is subject to the Commissioner's approval which may be granted only if
the plan provides for equitable apportionment of the operating expenses
and profits or losses among the members. The plan may, if the
Commissioner considers it feasible and equitable, make provision for
separate apportionments between private passenger automobile
insurance business and commercial automobile insurance business, or,
alternatively or in addition to that division, the plan may make provision
for separate apportionments between automobile liability insurance
business, including medical payments and uninsured motorist insurance,
and automobile physical damage insurance business. Any such
apportionments shall give consideration to a comparison between the
writings or car-year exposures of each insurer of automobile insurance
and the total writings or car-year exposures of all automobile insurers or,
in the case of any separate apportionments approved by the
Commissioner, a comparison between the writings or car-year exposures
of each insurer within the applicable division of automobile insurance
and the writings or car-year exposures of all insurers within that
division.
In connection with his approval of the plan, the Commissioner may
require that the plan make provision for such comparisons for a one-year
period or for a longer period not to exceed five years and may provide
for weighting the experience so as to attach a greater weight to the more
recent experience.
In connection with the approval of the plan's provisions respecting
equitable apportionment of the operating expenses or gains or losses of
the Facility, the Commissioner may require that the plan make provision
for a comparison between each insurer's percentage of the aggregate
written premiums or car-year exposures respecting automobile insurance
or any such division thereof and the insurer's percentage of total cessions
to the Facility of such insurance or division thereof so as to provide that
the insurer's portion of the operating expenses or gains or losses must be
the average of the two percentages; or the Commissioner may approve
or require any other similar or comparable provision for the
apportionment of the expenses or gains or losses of the Facility which
relates insurers' shares to their respective utilization of the Facility.
The plan of operation of the Underwriting Association is subject
to the commissioner's approval which may be granted only if the plan
provides for equitable apportionment of the operating expenses and
profits or losses among the members, including servicing carriers. The
plan may, if the commissioner considers it feasible and equitable, make
provision for separate apportionments between private passenger
automobile insurance business and commercial automobile insurance
business. Any such plan of apportionment of operating expenses, gains,
or losses shall give consideration between the writings and car-year
exposures of each insurer of automobile insurance in South Carolina,
including servicing carriers. In connection with his approval of the plan,
the commissioner may require that the plan make provision for such
comparisons for a one-year period or for a longer period not to exceed
five years and may provide for weighting the experience so as to attach
a greater weight to the more recent experience. The commissioner may
approve or require a provision for the apportionment of the expenses or
gains or losses of the Underwriting Association which relates to insurers
respective utilization of the Underwriting Association so as to increase
the apportionment to insurers who over utilize the Underwriting
Association, while disallowing the insurer's recovery of such increased
apportionment through the clean risk subsidy.
Concurrent with the effective date of this section, the clean risk
subsidy as defined in this chapter less commission, premium tax
expenses and time value of money considerations shall be collected and
paid to the Underwriting Association by all members and servicing
carriers and applied as operating income in determining the experience
of applicable individual private passenger automobile insurance risks
within the Underwriting Association. Any net gains of the Underwriting
Association shall be used to reduce the clean risk subsidy applying first
as a reduction to the level, base amount portion which is collected on all
private passenger and small commercial risks, but only to the extent that
the additional portion collected on risks with merit rating plan points
does not exceed thirty percent of the remaining clean risk subsidy after
considering the development of the final rate or premium charges under
Section 38-77-540(C). Only net losses of the Underwriting Association
attributed to the experience with individual private passenger automobile
insurance under Section 38-77-540(A) and (B) shall be recovered by an
increase in the clean risk subsidy. The annual calculation of the clean
risk subsidy by the Board of Governors and approval by the insurance
commissioner shall take into consideration expected underwriting and
investment income results using accepted actuarial methods and with an
upward adjustment for premium taxes, commissions, and the time value
of money. The clean risk subsidy shall be included in the final rate or
premium charge in effect for each automobile insurer and the
Underwriting Association on all private passenger automobile and small
commercial risks underwritten in South Carolina. The clean risk subsidy
is subject to normal cancellation procedure, and the level, base amount
portion which is collected on all private passenger and small commercial
risks shall be pro-rated on policy terms of less than twelve
months."
SECTION 19. Section 38-77-540 of the 1976 Code is amended to
read:
"Section 38-77-540. The ceding insurer shall transfer or
credit to the Facility on any policy of automobile insurance reinsured by
the Facility the pure loss component of its rate or premium charge
together with the profit and contingency component of the rate or
premium charge as determined under its rating plan or system as filed
with the Department. The ceding insurer shall retain as and for its
ceding commission the allocated loss adjustment expense component as
well as the underwriting and administrative expense components of the
rate or premium charge under ceding insurer's rating plan or system as
filed with the Department. However, no ceding insurer may include in
the agents' commissions component of its underwriting expenses any
amount greater than it has actually paid its agent as commission on the
reinsured risk.
The Underwriting Association shall accept the transfer of risk on
any policy of automobile insurance covering individual private
passenger and small commercial risks at the option of an insurer but only
at the rate or premium charge as determined under the rating plans
established by the governing board and approved by the commissioner,
subject, however, to Section 38-77-950 regarding reasonable utilization
of the Underwriting Association by member companies. The rate plans
for the Underwriting Association are subject to the commissioner's
approval which may be granted only if the plan is consistent with and
provides for the following:
(A) The final rate or premium charge on policies of private passenger
automobile insurance which meets each of the following requirements
shall be the association qualified rate as defined in this chapter:
(1) all drivers have less than two merit rating plan points; and
(2) all drivers have held a valid drivers license for three or more
years; and
(3) upon application for insurance, the applicant can show valid
proof of twelve months prior, continuous automobile liability insurance
coverage on vehicles owned by the applicant at the date of application
with any lapse of coverage not to exceed five days; and
(4) for the twelve months prior to application or policy renewal,
no driver has been involved in an automobile accident in which the
driver, or insurer on behalf of the driver, has paid or is required to pay
bodily injury or property damages to another; and
(5) for the twelve months prior to application or policy renewal,
an insurer of the applicant, insured or driver has not paid to or on behalf
of the applicant, insured or driver any amount as settlement of a claim
for benefits under an automobile insurance policy with the exception of:
(a) not more than one claim for benefits under physical damage
coverages excluding collision coverage;
(b) all claims for benefits under uninsured motorist coverages;
(c) all claims for benefits under underinsured motorist
coverages; and
(d) all glass coverage claims.
The safe driver discount is applicable to drivers with no merit rating
plan points under this section. Drivers within the applicant's or insured's
household which are specifically excluded from coverage by the
insurer's endorsement of the policy with the applicant's or insured's
consent in writing shall not be considered in determining the
requirements of this section.
(B) The final rate or premium charge for drivers of private passenger
automobiles subject to the merit rating plan who have less than two
merit rating plan points and for whom Section 38-77-540(A) is not
applicable shall be the association standard rate as defined in this
chapter.
The safe driver discount is applicable to drivers with no merit rating
plan points under this section.
(C) The final rate or premium charge for drivers of private passenger
automobiles subject to the merit rating plan who have two or more merit
rating plan points shall be determined by the actual experience of the
Underwriting Association with such drivers and with an upward
adjustment to achieve a twenty five percent reduction in the total clean
risk subsidy.
(D) The final rate or premium charge for small commercial risks
shall be the applicable Insurance Service Office (ISO) rates approved by
the department. Where ISO has filed only the pure loss costs
component, the governing board shall file an expense component for use
in developing a final rate.
The Underwriting Association shall make applicable rate filings
annually with the exception of the self-sustaining rate plan for multiple
point drivers which rate revisions may be filed every six months at the
option of the governing board. An insurer may elect to utilize the rate
plans of the Underwriting Association for an applicant or for an existing
policyholder, on renewal, in lieu of the insurer's own individually filed
and approved rates and not transfer the risk under that policy of
automobile insurance to the Underwriting Association.
An insurer shall transfer or credit to the Underwriting Association on
any policy of automobile insurance transferred to the Underwriting
Association for shared risk pooling the pure loss component of the rate
or premium charge as determined under the Underwriting Association's
rating plan as filed with the department. The insurer, unless contracted
pursuant to Section 38-77-590, shall retain as and for its commission the
lesser of either the allocated loss adjustment expense and expense
component of the rate or premium charge under the Underwriting
Association's rating plan as filed with the department or an amount equal
to the insurer's own filed allocated loss adjustment expense component
and expense component with any remainder transferred or credited to the
Underwriting Association. Insurers contracted pursuant to Section 38-77-590 shall retain as and for its commission the allocated loss
adjustment expense component and expense component of the rate or
premium charge under the Underwriting Association's rating plan as
filed with the department."
SECTION 20. Section 38-77-550 of the 1976 Code is amended to
read:
"Section 38-77-550. Reinsurance of a policy of automobile
insurance with the Facility does not create a privity of contract or any
other direct relationship between the policyholder of the reinsured policy
and the Facility. The contractual or other legal rights of the insured and
insurer are not affected by the reinsurance. The transfer of risk
under a policy of automobile insurance to the Underwriting Association
for shared risk pooling does not create a privity of contract or any other
direct relationship between the policyholder and the Underwriting
Association. The contractual or other legal rights of the insured and
insurer are not affected by the transfer."
SECTION 21. Section 38-77-560 of the 1976 Code is amended to
read:
"Section 38-77-560. An insurer ceding reinsurance to the
Facility on automobile insurance policies shall receive credit by way of
deduction from its unearned premium liability as calculated in
accordance with Section 38-9-170. However, reinsurance with the
Facility may not be deducted for purposes of the limitations-of-risk
provisions of Section 38-55-30. An insurer transferring risks on
automobile insurance policies to the Underwriting Association shall
receive credit by way of deduction from its unearned premium liability
as calculated in accordance with Section 38-9-170. However, business
transferred to the Underwriting Association may not be deducted for
purposes of the limitations of risk provisions of Section 38-55-30."
SECTION 22. Section 38-77-570 of the 1976 Code is amended to
read:
"Section 38-77-570. The funds and reserves of the Facility
must be invested in lawful investments permitted to property and
casualty insurers under the laws and regulations governing investments
of property and casualty insurers. In determining the net profit or loss
resulting from the operations of the Facility, all investment income and
profits must be taken into consideration. No distribution of the funds,
assets, property, or profits of the Facility may be made except pursuant
to the Commissioner's written order. The funds and reserves of
the Underwriting Association must be invested in lawful investments
permitted to property and casualty insurers under the laws and
regulations governing investments of property and casualty insurers. In
determining the net profit or loss resulting from the operations of the
Underwriting Association all investment income and profits must be
taken into consideration. No distribution of the funds, assets, property,
or profits of the Underwriting Association may be made except pursuant
to the commissioner's written order unless otherwise permitted under
this chapter."
SECTION 23. Section 38-77-580 of the 1976 Code, as last amended
by Act 248 of 1991, is further amended to read:
"Section 38-77-580. The operations and affairs of the
facility Underwriting Association are under the
direction and control of a governing board of nineteen persons of whom
four must be residents of South Carolina appointed by the Governor of
South Carolina to represent consumers. The commissioner shall appoint
eight persons to represent the insurance industry; in appointing these
persons, the commissioner shall select two from a list of not less than
five nominated by the American Insurance Association from the officers
or employees of insurers licensed in South Carolina and which are
members or subscribers of that organization; he shall select two from a
list of not less than five persons nominated by the American Mutual
Insurance Alliance from the officers or employees of insurers licensed
in South Carolina and which are members or subscribers of that
organization; he shall select two from a list of not less than five persons
nominated by the National Association of Independent Insurers from the
officers or employees of insurers licensed in South Carolina and which
are members or subscribers of that organization; he shall select two
persons, one of whom must be an officer or employee of a stock insurer
licensed in South Carolina and not a member or subscriber of any of
these organizations, and one of whom must be an officer or employee of
a nonstock insurer licensed in South Carolina and not a member or
subscriber of any of these organizations; however, of the eight persons
appointed to represent the insurance industry, not less than five must be
residents of South Carolina and those who are not residents of South
Carolina must have job responsibilities that include the supervision over
South Carolina operations; not less than two must be officers or
employees of insurers licensed to transact automobile insurance in South
Carolina and domiciled therein. The commissioner shall appoint four
persons to represent producers, all of whom must be residents of South
Carolina; he shall select two such persons from a list of not less than five
nominated by the stock agents' association and two from a list of not less
than five persons nominated by the mutual agents' association. The
commissioner shall appoint two persons to represent the
designated servicing agents, one of whom must be an
officer of a premium service finance company and the other of whom
must be a designated servicing agent and both of whom
must be residents of South Carolina. In addition the Consumer
Advocate is an ex-officio member of the governing board of the
Reinsurance Facility Underwriting Association. No
person who is associated with any business within the meaning of
Section 8-13-20, which is either subject to regulation by the Department
of Insurance or which provides goods or services to the facility
Association for compensation, is eligible for appointment to the
board to represent consumers, except that any person serving on the
board representing consumers on the effective date of this provision who
would otherwise be disqualified from serving based on this provision
may continue to serve for the remainder of his current term.
The commissioner is chairman of the board, ex officio, but has no
vote except in the case of a tie. The commissioner, or his designated
representative, shall preside over all meetings which must be held not
less than quarterly in South Carolina at the times and places the
commissioner designates. However, upon the filing with the
commissioner of a request for a meeting signed by not fewer than five
members of the board and specifying the subjects to be discussed at the
proposed meeting, the commissioner shall call a special meeting of the
board to be held not less than fifteen nor more than thirty days after
receipt of the request. Notice, in writing, of the special meeting must be
provided members of the board.
Members of the board shall serve one year or until their successors are
appointed and have qualified.
Amendment of the plan of operation may be made only at the annual
meeting of the board or at a special meeting called by the commissioner
for that purpose and so specified in the notice of meeting. Amendments
of the plan require the affirmative vote of two-thirds of all the board
members and are subject to the commissioner's approval. The
commissioner may approve amendments only if they are consistent with
the purposes of this chapter. If the consumer-representative members of
the board unanimously dissent from a proposed amendment and specify
their reasons for dissent in writing, the commissioner may not approve
the amendment until after a public hearing addressed to the reasons for
the dissent.
The commissioner may make provision for voting by proxy at
meetings.
The commissioner may propose to the board any amendment to or
modification of the plan that the commissioner considers to be necessary
to render the plan reasonable or consistent with the purposes of this
chapter, specifying in writing the reasons for any proposed amendment
or modification. In the event that the board fails to adopt his proposed
amendment or modification, the commissioner may, after notice and
public hearing addressed to the reasons for the proposed amendment or
modification, promulgate the amendment or modification considered
necessary to render the plan reasonable or consistent with the purposes
of this chapter."
SECTION 24. Section 38-77-585 of the 1976 Code, as added by Act
557 of 1990, is amended to read:
"Section 38-77-585. Any insurer designated
contracted pursuant to Section 38-77-590(a) is entitled to
appoint an officer or employee to the governing board of the
Reinsurance Facility Underwriting Association if not
otherwise represented on the governing board pursuant to Section
38-77-580. Any member of the governing board representing an
insurer so designated contracted must abstain from
casting a vote on any matter which would have a material effect on the
operations of that insurer as it relates to the affairs of the insurer acting
as a designated contracted insurer for the
Reinsurance Facility Underwriting Association."
SECTION 25. Section 38-77-590 of the 1976 Code, as last amended
by Act 524 of 1990, is further amended to read:
"Section 38-77-590. (a) Not more than six months after
July 9, 1974, or at an earlier time as the 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.
The governing board of the Underwriting Association shall
contract with insurers meeting eligibility requirements promulgated by
the governing board to act as servicing carriers for the writing of
automobile insurance through producers assigned to the servicing carrier
by the governing board. An insurer may apply for servicing carrier status
prior to the effective date of this section and shall be contracted with on
the same terms and conditions as servicing carriers of the former South
Carolina Reinsurance Facility. The governing board may establish
reasonable nondiscriminatory standards which all servicing carriers must
meet for contract renewal. The servicing carriers shall not be subject to
the statutory provisions or regulations regarding excessive utilization of
the Underwriting Association for shared risk pooling of policies
produced by its assigned servicing agents. The servicing carrier shall
transfer the risk on every policy of automobile insurance produced by its
assigned servicing agents to the Underwriting Association. Servicing
carriers and their assigned servicing agents may not cancel, nonrenew,
or refuse to write any policy of automobile insurance for individual
private passenger automobile and small commercial risks as defined in
this chapter except for non-payment of premium, failure to possess a
valid drivers license, or any other valid reason promulgated by the
commissioner which is not inconsistent with the purposes of this
chapter.
(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 Commissioner's
approval. The governing board of the Underwriting Association
shall assume the contracts of servicing carriers previously contracted
with the former South Carolina Reinsurance Facility prior to the creation
of the South Carolina Automobile Underwriters Association. Producers
assigned to a servicing carrier in accordance with this section and
producers previously designated to a servicing carrier by the
commissioner or the governing board of the former reinsurance facility
must remain assigned to that servicing carrier until and unless the
producer's written request to change the assignment is received by the
governing board of the Underwriting Association or until the assignment
is terminated and transferred to another carrier upon non-renewal or
termination of that servicing carrier's contract.
(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: A producer may apply to the governing
board for assignment to a servicing carrier and is eligible for assignment
upon a finding by the governing board that the applicant meets the
following qualifications:
(1) The applicant has been, for ten five
continuous years, a licensed resident property and casualty insurance
agent and is at the time of application an agency owner or
principal associated with an agency in South Carolina which has
been actively in business for five years with authority from one or
more licensed insurers to write liability and physical damage insurance
on private passenger automobiles; and
(2) At the time of application the applicant is servicing and
owns the renewals on private passenger and commercial automobile
insurance business, the net premiums on which exceeded seventy-five
thousand dollars of potential cedeable automobile insurance during any
one of the previous five calendar years preceding the application;
At the time of application the applicant is servicing and owns the
renewals on private passenger and commercial automobile insurance
business, the net premiums on which exceeded one hundred thousand
dollars during any one of the previous five calendar years preceding the
application; and
(3) Neither the applicant, nor any employee of the applicant
or the applicant's corporate agency, nor any partner or shareholder in any
related insurance agency, related premium service company, or related
other business, has any direct or indirect connection with any voluntary
market outlet for the purpose of writing any type of automobile
insurance in this State except for motorcycle insurance and types not
cedeable to the facility;
(4) The applicant has not contributed to his termination as agent
by any insurer because of any illegal breach of agency agreement or
other related, improper, or unethical conduct; 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 the assignment as a
producer, the applicant shall furnish at his expense a bond in an amount
of not less than fifty thousand dollars for the faithful performance of the
duties as a producer, executed by the applicant as principal and a
corporate surety licensed to do business in this State as surety, and shall
also have effective errors and omissions insurance by an insurer licensed
to do business in this State, with the bond and errors and omissions
insurance being subject to approval by the governing board.
(e) The governing board shall assign a specific location to each
producer designated. The governing board shall determine from the
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; provided, however, that an applicant maintaining
multiple offices on June 4, 1987, is entitled to maintain two locations as
a designated agent which he owned and operated at that time and
through which premiums in at least the amount of seventy-five thousand
dollars were written. The governing board shall terminate the
designation, and the 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. A
producer assigned to a servicing carrier may not open or maintain more
than one location at which the solicitation or transaction of any
automobile insurance business is conducted without the written
authorization of the governing board. The governing board shall
terminate the assignment of any servicing agent who does not comply
with this requirement upon demand by the governing board. Applicants
maintaining multiple offices on January 1, 1993, are entitled to maintain
two locations as a producer which the agent owned and operated at that
time and through which automobile insurance premiums in at least the
amount of two hundred and fifty thousand dollars were written by the
agent at each of the two locations.
(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. The assignment of a producer to
a servicing carrier by the governing board is transferable to a spouse,
child, parent, brother, or sister of the producer upon the producer's
retirement, incapacity, or death. The assignment may, at the election of
the producer by written notice thereof to the governing board, be
irrevocably transferred to a corporation authorized to transact business
in South Carolina by the Secretary of State and licensed by the insurance
commissioner as an insurance agency. The duties of an individual or
corporate producer may be performed by one or more qualified
employees of the producer or the individual 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 all licenses of the producer and of any other insurance agent
and premium service company knowingly involved in this connection.
Upon termination, the producer's expirations on designated business
become the property of the Facility.
(h) A designated servicing carrier who fails
a claims audit shall have no new designated producer
servicing agent assignments until the time it passes a reaudit
within a reasonable time prescribed by the governing board. If this
carrier fails two claims audits, including a reaudit, within any three-year
period that carrier is disqualified for renewal of its contract with the
facility association upon expiration of its existing
contract.
(h) The governing board of the Underwriting Association shall
not contract with an insurer to act as a servicing carrier solely for the
insurer's own duly authorized and voluntarily contracted agents.
Servicing carriers shall accept assignments of servicing agents on an
equitable, non-discriminatory basis promulgated by the governing board.
Insurers, other than servicing carriers, shall not transfer risks to the
Underwriting Association on new or renewal policies produced by a
servicing agent, but may, however, subject to the provisions of this
chapter and specifically Section 38-77-950, transfer risks to the
Underwriting Association on new and renewal policies produced by
their own duly authorized agents who are not contracted and assigned to
a servicing carrier as provided for in this section."
SECTION 26. Section 38-77-630 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-77-630. (A) A policy, other than a renewal
policy, may be ceded to the South Carolina Reinsurance Facility only
when the application is accompanied by either a renewal notice from
another insurer or a motor vehicle report (MVR), issued at the point of
sale, together with the full premium correctly reflecting the facts shown
on the MVR or consistent with the premium quoted in the renewal
notice. A risk, other than at renewal, may be transferred to the
Underwriting Association only when the application is accompanied by
either a renewal notice from another insurer or a motor vehicle report
(MVR) issued at the point of sale, together with the full premium
correctly reflecting the facts shown on the MVR or consistent with the
premium quoted in the renewal notice.
(B) To facilitate compliance with this requirement, a carrier shall
require an applicant other than a renewal applicant, to obtain the MVR
or a renewal notice from the insurance carrier who provided the
insurance coverage then in effect and present it to the agent upon
making an application. In those cases, the applicant must be credited for
the amount paid for the MVR.
(C) In the case of an applicant who holds a valid driver's license
from another state but is not yet licensed in this State, a copy of this out-of-state driver's license may be submitted with the application in lieu of
the MVR or renewal notice above required in this section. The MVR,
renewal notice, or copy of the applicant's driver's license, as applicable,
must be kept with the application by the carrier in the manner the
facility Underwriting Association requires.
SECTION 27. Section 38-77-910 of the 1976 Code is amended by
adding:
"Any violation of this section or the prohibition against
discriminatory underwriting practices as described under Section 38-77-110 may be cause for revocation or suspension of the insurer's or agent's
license by the commissioner. Upon a complaint being filed alleging
discrimination, the complaint shall be referred to the Office of the
Consumer Advocate who shall investigate it and report his findings to
the commissioner for appropriate action."
SECTION 28. Section 38-77-920 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-77-920. Except as provided for in Section 38-77-110 and as is specifically provided for otherwise by law, no
automobile insurer may refuse acceptance of automobile insurance for
an insurable risk from any applicant nor require that certain classes or
types of risks be placed through some particular agent or employee.
This section is not intended to preclude any insurer from recognizing
and giving effect to the property rights of agents in expirations or
renewals.
No agent who represents more than one insurer of automobile
insurance may refuse to accept in behalf of an insurer represented by
him automobile insurance for an insurable risk where the applicant for
insurance designates by name or description the insurer of his choice.
If the applicant relies upon the skill and judgment of the agent to place
the risk in any insurer represented by the agent, the agent may place the
risk in the insurer which he considers appropriate. No insurer may
agree, collude, or conspire with an agent or give, offer, or promise an
agent anything of value to place any risk or any class or type of risk
under such circumstances in another insurer. Every such agreement is
utterly void and every act of collusion or conspiracy constitutes an act
of unfair competition by both the insurer and agent which, if proved,
must result in the suspension or revocation of the license of each for not
less than one year, in addition to any other penalties or liabilities
applicable.
No automobile insurer authorized to transact automobile insurance in
this State which offers automobile insurance through the mails or uses
the mails in transacting automobile insurance on insurable risks situate
in this State may restrict its mailings or offerings to certain counties,
areas, or zip-code territories of this State. The commissioner is directed
to examine an insurer's records at any time the commissioner considers
it necessary to determine that the insurer is not so restricting or limiting
its offerings."
SECTION 29. Section 38-77-940 of the 1976 Code is amended to
read:
"Section 38-77-940. No insurer of automobile insurance shall
directly or indirectly by offer or promise of reward or imposition or
threat of penalty or through any artifice or device whatsoever, confer
any benefit upon any agent or impose any detriment upon any such
agent for the purpose of avoiding any class or type of automobile
insurance risk which the insurer considers it necessary to reinsure in
the Facility transfer to the Underwriting Association;
nor shall any offer or promise of reward or imposition or threat of
penalty in connection with any other line or type of insurance be so tied
to automobile insurance as to have a tendency to induce the agent to
avoid any such class or type of automobile insurance risk; nor shall any
insurer of automobile insurance provide to agents, directly or indirectly,
orally or in writing, any listing of classes or types of automobile
insurance risks which it considers necessary to reinsure in the Facility;
nor shall any insurer of automobile insurance terminate its insurance
business with any one agent over the writing of certain classes or types
of automobile insurance risks without also pulling out of the entire State
or terminating its similar insurance business with all other agents in the
State at the same time for a period of time of at least 365 days, except
that if the insurer reinstates the agent within thirty days of the
determination that the termination was unlawful, then this provision
shall not apply; nor shall any insurer of automobile insurance do
anything unfair, or unfairly fail to do anything, which has the effect of,
or which results in, causing any ceded transferable
insurance business to have a detrimental effect on any incentive bonuses
paid by the insurer to agents. Any act in violation of this section
constitutes an act of unlawful discrimination and unfair competition
which, if wilful, shall result in the suspension or revocation of the
insurer's certificate of authority for not less than twelve months. Any
agreement made in violation of this section shall be void.
Nothing in this section may be considered to preclude or impair
agreements between insurers and their agents or some of their agents to
pay contingency commissions or a profit-sharing bonus based upon the
quality of business; nor shall the insurers, in any manner, use that
business placed in the Facility Underwriting
Association when determining the quality bonus; nor may it be
considered to preclude an agreement between any agent and an insurer
of automobile insurance to exclude from any profit-sharing or
contingency arrangement automobile insurance business coming
unsolicited to the agent and written by him solely because of the
mandate of coverage provided in this chapter prohibition
against discriminatory underwriting practices described in Section 38-77-110.
No insurer of automobile insurance shall cancel its representation by
an agent primarily because of the volume of automobile insurance
placed with it by the agent on account of the statutory mandate of
coverage prohibition against discriminatory underwriting
practices nor because of the amount of the agent's automobile
insurance business which the insurer has considered it necessary to
reinsure in the Facility transfer to the Underwriting
Association."
SECTION 30. Section 38-77-950 of the 1976 Code, as last amended
by Act 113 of 1991, is further amended to read:
"Section 38-77-950. It is the intent of this chapter that the
facility Underwriting Association must not be
excessively nor unreasonably utilized by automobile insurers for unfairly
competitive purposes or for purposes of unfairly discriminating against
certain classes or types of automobile insurance risks having the same
or similar objective risk characteristics as other risks in the same class
under the rating plan for the classification of risks promulgated by the
department, nor for the purpose of discriminating against the risks or
risks in certain rating territories. The commissioner shall prohibit
unreasonable or excessive utilization of the facility
Underwriting Association.
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.
A prima facie case of excessive or unreasonable utilization
shall be established upon a showing that an automobile insurance insurer
or group of such insurers under the same management has transferred or
is about to transfer to the Underwriting Association for shared risk
pooling policies whose combined premiums are more than thirty-five
percent of total direct written premiums on South Carolina automobile
insurance as reported in the most recently filed annual statements of
such insurer or group.
Upon the written request of the policyholder, insurance companies
doing business in this State shall give written notice to the policyholder
informing him whether or not he and a driver under the policy is in the
facility. Insurers shall give written notice to the policyholder of a risk
ceded to the facility which does not qualify for the safe driver discount
in Section 38-73-760(e)."
SECTION 31. Section 38-77-960 of the 1976 Code is amended to
read:
"Section 38-77-960. When dealing with the agents of the
company, who are licensed to sell automobile insurance, the company
may not use any of the business placed in the facility in determining the
profitability of that agent's business. Further, the company shall not ask
any agent that agent's business. Further, the company shall not ask any
agent not to write any kind of automobile business or hold the Facility
business against any agent in any manner which could be construed as
being detrimental to the agent.
When dealing with the agents of the company, who are licensed
to sell automobile insurance, the company may not use any business
transferred to the Underwriting Association in determining the
profitability of that agent's business. Further, the company shall not hold
the business transferred to the Underwriting Association against any
agent in any manner which could be construed as being detrimental to
the agent."
SECTION 32. Section 38-73-10(a)(3) of the 1976 Code is amended
to read:
"(3) provide that investment income accruing to automobile
insurers is taken into consideration in the approval of rates or premium
charges and in the determination of any net loss incurred by the
South Carolina Reinsurance Facility South Carolina
Automobile Underwriters Association and to make provision for the
securing by the department of all necessary or appropriate financial data
for purposes of ascertaining and determining the investment income and
the profits from realized and unrealized capital gains of each automobile
insurer doing business in this State."
SECTION 33. Section 38-73-455 of the 1976 Code, as last amended
by Act 113 of 1991, is further amended to read:
"Section 38-73-455. An automobile insurer shall offer two
different rates for automobile insurance, a base rate as defined in Section
38-73-457 and an objective standards rate which is twenty-five percent
above the base rate. Both of these rates are subject to all surcharges or
discounts, if any, applicable under any approved merit rating plan, credit
or discount plan promulgated or approved by the Commissioner.
Applicants, or a current policyholder, seeking automobile insurance
with an insurer must be written at the base rate, unless one of the
conditions or factors in subitems (1) through (8) of item (A) is present.
(A) The named insured or any operator who is not excluded in
accordance with Section 37-77-340 and who resides in the same
household or customarily operates an automobile insured under the same
policy, individually:
(1) has obtained a policy of automobile insurance or continuation
thereof through material misrepresentation within the preceding thirty-six months; or
(2) has had convictions for driving violations on three or more
separate occasions within the thirty-six months immediately preceding
the effective date of coverage as reflected by the motor vehicle record
of each insured driver as maintained by the Department of Highways
and Public Transportation; or
(3) has had two or more "chargeable" accidents
within the thirty-six months immediately preceding the effective date of
coverage. A "chargeable" accident is defined as one
resulting in bodily injury to any person in excess of three hundred
dollars per person, death, or damage to the property of the insured or
other person in excess of seven hundred fifty dollars. Accidents
occurring under the circumstances enumerated below are not considered
chargeable.
(a) The automobile was lawfully parked. An automobile
rolling from a parked position is not considered as lawfully parked but
is considered as operated by the last operator.
(b) The applicant or other operator or owner was reimbursed
by or on behalf of a person responsible for the accident or has a
judgment against this person.
(c) The automobile of an applicant or other operator was struck
in the rear by another vehicle and the applicant or other operator has not
been convicted of a moving traffic violation in connection with the
accident.
(d) The operator of the other automobile involved in the
accident was convicted of a moving traffic violation and the applicant
or other operator was not convicted of a moving traffic violation in
connection therewith.
(e) An automobile operated by the applicant or other operator
is damaged as a result of contact with a "hit and run" driver,
if the applicant or other operator so reports the accident to the proper
authority within twenty-four hours or, if the person is injured, as soon
as the person is physically able to do so.
(f) Accidents involving damage by contact with animals or
fowl.
(g) Accidents involving physical damage, limited to and caused
by flying gravel, missiles, or falling objects.
(h) Accidents occurring as a result of the operation of any
automobile in response to an emergency if the operator at the time of the
accident was responding to a call of duty as a paid or volunteer member
of any police or fire department, first aid squad, or any law enforcement
agency. This exception does not include an accident occurring after the
emergency situation ceases or after the private passenger motor vehicle
ceases to be used in response to the emergency; or
(4) has had one "chargeable" accident and two
convictions for driving violations, all occurring on separate occasions,
within the thirty-six months immediately preceding the effective date of
coverage as reflected by the motor vehicle record of each insured driver
as maintained by the Department of Highways and Public
Transportation; or
(5) has been convicted of or forfeited bail during the thirty-six
months immediately preceding the effective date of coverage for
operating a motor vehicle while in an intoxicated condition or while
under the influence of drugs; or
(6) has been convicted or forfeited bail during the thirty-six
months immediately preceding the effective date for:
(a) any felony involving the use of a motor vehicle,
(b) criminal negligence resulting in death, homicide, or assault
arising out of the operation of a motor vehicle,
(c) leaving the scene of an accident without stopping to report,
(d) theft or unlawful taking of a motor vehicle,
(e) operating during a period of revocation or suspension of
registration or license,
(f) knowingly permitting an unlicensed person to drive,
(g) reckless driving,
(h) the making of material false statements in the application
for licenses or registration,
(i) impersonating an applicant for license or registration or
procuring a license or registration through impersonation, whether for
himself or another,
(j) filing of a false or fraudulent claim or knowingly aiding or
abetting another in the presentation of such a claim,
(k) failure to stop a motor vehicle when signaled by means of
a siren or flashing light by a law enforcement vehicle; or
(7) has for thirty or more consecutive days during the twelve
months immediately preceding the effective date of coverage, owned or
operated the automobile to be insured (or if newly acquired, the
automobile it replaces) without liability coverage in violation of the laws
of this State; or
(8) has used the insured automobile as follows or if the insured
automobile is:
(a) used in carrying passengers for hire or compensation,
except that the use of an automobile for a car pool must not be
considered use of an automobile for hire or compensation,
(b) used in the business of transportation of flammables or
explosives,
(c) used in illegal operation, or
(d) no longer principally used and garaged within the State, but
not to include students who are operating a motor vehicle registered in
this State while attending an institution located in another state.
(B) In the event that one or more of the conditions or factors
prescribed in items (1) through (8) of subsection (A) exist, the motor
vehicle customarily operated by that individual must be written at the
objective standards rate.
(C) Member companies of an affiliated group of automobile
insurers may not utilize different filed rates for automobile insurance
coverages which they are mandated by law to write. For the purpose of
this section, an affiliated group of automobile insurers includes a group
of automobile insurers under common ownership, management, or
control. Those automobile insurers designated pursuant to Section 38-77-590(a), for automobile insurance risks written by them through
producers designated by the facility governing board pursuant to that
section, shall utilize the rates or premium charges by coverage filed and
authorized for use by the rating organization licensed by the
commissioner pursuant to Article 11, Chapter 73 of this title, which has
the largest number of members or subscribers for automobile insurance
rates. However, those automobile insurers designated pursuant to
Section 38-77-590(a) are not required to use those same rates or
premium charges described in the preceding sentence for risks written
by them through their authorized agents not appointed pursuant to
Section 38-77-590.
(D) An automobile insurance policy may be endorsed at any time
during the policy period to reflect the correct rate or premium applicable
by reason of the factors or conditions described in subsection (A) which
existed prior to the commencement of the policy period in which the
endorsement is made, regardless of whether the factors or conditions
were known or disclosed to the insurer at the commencement of the
policy period. However, no policy may be endorsed during a policy
period to reflect factors or conditions occurring during that policy
period. A policy may be endorsed during a policy period to recognize
the addition or deletion of an operator or vehicle.
(E) For purposes of determining the applicable rates to be charged an
insured, an automobile insurer shall obtain and review an applicant's
motor vehicle record.
An automobile insurer shall file and offer for automobile
insurance a rate as defined in Section 38-73-457, which rate is subject
to all surcharges or discounts, if any, applicable under any approved
merit rating plan, credit or discount plan promulgated or approved by the
commissioner and is subject to the application of the clean risk subsidy
as defined in Chapter 77 of this title. Additionally, an automobile
insurer may utilize and offer at its option on policies not transferred to
the South Carolina Automobile Underwriters Association for shared risk
pooling the final rate or premium charges approved by the commissioner
for rating plans of the Underwriting Association which are also subject
to the discount or surcharge plans promulgated or approved by the
Commissioner and the clean risk subsidy.
An individual insurer or member companies of an affiliated group of
automobile insurers may not utilize different filed rates for automobile
insurance with the exception that an insurer or different member
company of an affiliated group of insurers may utilize the Underwriting
Association rate or premium charges pursuant to this section. For the
purpose of this section, an affiliated group of automobile insurers
includes any group of automobile insurers under common ownership,
management, or control. Those automobile insurers contracted pursuant
to Section 38-77-590(A), for automobile insurance risks written by them
through producers assigned by the governing board of the Underwriting
Association pursuant to that same section, shall utilize the rates or
premium charges by coverage filed and authorized for use by the
Underwriting Association pursuant to Section 38-73-1420. However,
those automobile insurers contracted pursuant to Section 38-77-590(A)
are not required to use those same rates or premium charges described
in the preceding sentence for risks written by them through their duly
authorized agents not assigned pursuant to Section 38-77-590 on
policies not transferred to the Underwriting Association for shared risk
pooling.
No policy may be endorsed during a policy period to reflect factors
or conditions occurring during that policy period. A policy may be
endorsed during a policy period to recognize the addition or deletion of
an operator or vehicle.
For purposes of determining the applicable rates to be charged an
insured on new applications, an automobile insurer shall obtain and
review an applicant's motor vehicle record."
SECTION 34. Section 38-73-457 of the 1976 Code is amended to
read:
"Section 38-73-457. Notwithstanding Sections 38-73-920
and 38-73-1210, every automobile insurer and rating organization shall,
prior to October 1, 1987, file with the Commissioner a base rate, which
is defined as a rate by coverage calculated solely upon the experience
generated by the risk for each class and territory
retained by the insurer in its voluntary book of business and which must
not include experience generated by risks ceded or assumed from the
Reinsurance Facility established under Section 38-73-1030. An
objective standards rate by coverage must also be filed which is twenty-five percent above the base rate previously described for each class and
territory. The base rate must be calculated by removing from the rate or
premium charge, then in effect for the automobile insurer, that portion
of the rate or premium charge attributable to the net gain or loss of the
insurer as a result of participation in the operating results of the Facility
as required by Section 38-77-760. In determining the base rate and
objective standards rate, by coverage, the Commissioner, in order that
no extra premium revenue is generated by this section, shall require that
the insurer's average rate, by coverage, on October 1, 1987, (computed
as a weighted average of the base rate and objective standards rate, by
coverage, as determined by the Commissioner), not exceed the insurer's
average rate, by coverage, prior to October 1, 1987, as determined by the
Commissioner. The provisions of the Administrative Procedures Act
apply to any court appeal of a base rate or objective standards rate
brought thereunder. The base rate or objective standards rate approved
by the Commissioner may be put into effect under bond in a similar
manner that a public utility may put a proposed rate increase into effect
under bond as provided by law. No insurer may file a base rate for any
class or territory which is higher than the rate or premium charge,
exclusive of that portion required by Section 38-73-460, approved by the
Commissioner for use on October 1, 1987. As a result of this section,
no insured may receive an increase in rates for other than an increase in
coverage or due to the provisions of Section 38-77-280, 38-77-610, or
38-73-455, unless the insurer files additional rates in accordance with
this title.
The base rate and objective standards rate filed by each insurer of
automobile insurance are effective if they meet the requirements of this
section, on or after July 1, 1988, for all eligible applicants and upon the
renewal date, on or after July 1, 1988, for all eligible existing
policyholders. If the base rate and objective standards rate filed by an
automobile insurer do not meet the requirements of this section, the
Commissioner shall suspend the authority of that insurer to write
automobile insurance until the deficiencies are corrected.
After July 1, 1988, no rate or premium charge, exclusive of the
Facility recoupment charge approved or established pursuant to Section
38-77-610 may be approved for an insurer of automobile insurance
unless that rate or premium charge is calculated in accordance with this
section and meets the other applicable requirements of this title
pertaining to the approval of rates or premium charges.
Notwithstanding Sections 38-73-920 and 38-73-1210, every
automobile insurer and rating organization shall file with the
commissioner a rate for automobile insurance by coverage calculated
solely upon the experience generated by the insurer in its book of
business and which must not include experience generated by risks
transferred to the Underwriting Association for shared risk pooling.
Additionally, an automobile insurer may utilize and offer at its option on
policies not transferred to the Underwriting Association for shared risk
pooling the final rate or premium charges approved by the commissioner
for rating plans of the Underwriting Association.
The Consumer Advocate, upon request to the commissioner, must be
provided by him with a copy of any base rate filed with the
commissioner along with any supporting materials, documents, or
studies utilized to support the filed base rate. In addition, every
automobile insurer and rating organization shall promptly respond to
requests for information and data requested by the Consumer Advocate
relating to the filed base rate. The Consumer Advocate must be
afforded an opportunity for a hearing before the commissioner on any
filed base rate before it takes effect that he believes does not
meet the requirements of this section. Final decisions of the
commissioner regarding this hearing are subject to the provisions of the
State Administrative Procedures Act.
Effective March 1, 1994, the commissioner shall disallow the
further use of the objective standards rate previously filed in accordance
with this section; however, upon the effective date of this section
nothing herein should be construed to require a rating organization, its
members or subscribers, or an individual insurer to immediately refile
final rates or premium charges previously approved by the commissioner
and referred to as the base rate for automobile insurance coverages.
Members or subscribers of a rating organization or individual insurers
are authorized to continue to use those base rates approved before the
effective date of this section."
SECTION 35. Section 38-73-460 of the 1976 Code is amended to
read:
"Section 38-73-460. In the making and approval of rates for
automobile insurance, consideration must be given to the net gains or
losses incurred by insurers as a result of participation in the operating
results and expenses, respectively, of the South Carolina Reinsurance
Facility Automobile Underwriters Association."
SECTION 36. Section 38-73-520 of the 1976 Code is amended to
read:
"Section 38-73-520. With the exception of an insurer's use
of the rate plans of the South Carolina Automobile Underwriters
Association pursuant to Sections 38-73-455 and 38-73-457,
Every every insurer shall file with the commissioner
every manual of classifications, rules, and rates, every rating plan, and
every modification of any of the foregoing which it proposes to use.
Every filing shall state the proposed effective date thereof and shall
indicate the character and extent of the coverage contemplated."
SECTION 37. Section 38-73-735 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-73-735. In addition to risk and territorial
classification plans promulgated or approved under Section 38-73-730,
the commissioner may promulgate plans to afford credits or discounts
to automobile insureds, or he may approve the credit or discount plans
filed with him by insurers of automobile insurance. No automobile
insurance credit or discount plan may be promulgated or approved by
the commissioner unless: (1) the criteria for determining eligibility for
credits or discounts under the plan are objective, clear, and unequivocal;
(2) the criteria are based upon factually or statistically supported data;
and (3) the credits or discounts provided under the plan will be afforded
by the insurer on a nondiscriminatory basis to all insureds who are
eligible therefor. If an insurance credit or discount plan is given to
an insured pursuant to this section, the policy may be ceded to the
Reinsurance Facility in accordance with the facility's plan of
operation."
SECTION 38. Section 38-73-750 of the 1976 Code, as last amended
by Act 148 of 1989, is further amended to read:
"Section 38-73-750. Automobile insurers shall file with the
State Rating and Statistical Division their plans or systems for allocating
expenses and profit as respects the various kinds or types of automobile
insurance risks and the classes of risks thereunder. However, no plan or
system may be filed which is inconsistent with the classification of risks
promulgated by the commissioner. No plan or system may be filed or
approved if the purpose or effect is to discriminate unfairly or
unreasonably in respect to the allocation of expenses or profit between
classes of risks or if the purpose or effect is to impose a burden or
detriment upon the South Carolina Reinsurance Facility or to secure
to the insurer using the plan or system an unfair or unreasonable
competitive advantage to the detriment of the South Carolina
Reinsurance Facility or the South Carolina Automobile
Underwriters Association or other insurers. The commissioner after
due notice and hearing, shall disapprove and disallow the further use of
an inconsistent, discriminatory, burdensome, or competitively unfair
plan or system for the allocation of expenses and profit."
SECTION 39. Section 38-73-760(b) of the 1976 Code, as last
amended by Act 148 of 1989, is further amended to read:
"(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, and 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
by the commissioner or which may be under consideration for
promulgation, 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."
SECTION 40. Section 38-73-920 of the 1976 Code is amended to
read:
"Section 38-73-920. No insurer may make or issue a contract
or policy except in accordance with the filings which are in effect for the
insurer as provided in this chapter or in accordance with Section 38-73-1060 or Sections 38-73-455 and 38-73-457, as pertaining to
utilization of the Underwriting Association rate plans by insurers.
Notwithstanding Section 38-73-10, item (2) of Section 38-73-330, and
item (4) of Section 38-73-430, filings for property and casualty rate
increases may not be approved for any insurer or rating organization for
any line, sub-line, or otherwise identifiable property and casualty
insurance coverage for which a rate increase has previously been granted
within the immediately preceding twelve months. However, if
satisfactory evidence is presented to the commissioner by an insurer or
rating organization that the continued use of the previously approved
rates for the line, sub-line, or otherwise identifiable property and
casualty insurance coverage may result in the insolvency of an insurer,
more frequent rate increases may be approved. This section does not
apply to contracts or policies for inland marine risks as to which filings
are not required."
SECTION 41. Section 38-73-1420 of the 1976 Code, as added by Act
148 of 1989, is amended to read:
"Section 38-73-1420. After June 30, 1989, the Board of
Governors of the South Carolina Reinsurance Facility shall file an
expense component for private passenger automobile insurance rate or
premium charges after the rating organization with the largest number
of members or subscribers has filed a pure loss component for private
passenger automobile insurance with the commissioner. Upon the
approval of such components, those automobile insurers designated
pursuant to Section 38-77-590(A), for risks written by them through
producers designated pursuant to that same section, shall utilize these
final rate or premium charges. Automobile insurers designated pursuant
to Section 38-77-590(A) are not required to use those same final rates or
premium charges for risks written through their agents not appointed
pursuant to Section 38-77-590.
The board of governors of the South Carolina Automobile
Underwriters Association shall file an expense component for rate or
premium charges developed under rate plans approved by the
commissioner for the Underwriting Association. The board of governors
shall file a pure loss component to use in developing the association
standard rate and a pure loss component to use in developing the
association qualified rate as defined in Chapter 77 of this title. The
board of governors shall file a pure loss component based on the
experience of underwriting multiple point drivers of individual private
passenger automobile insurance risks within the shared risk pool of the
Underwriting Association to use in developing rate or premium charges
for that group pursuant to Section 38-77-540(C).
Automobile insurers contracted to the South Carolina Automobile
Underwriters Association pursuant to Section 38-77-590(a) and all
insurers on policies of automobile insurance transferred to the
Underwriting Association for shared risk pooling shall utilize the final
rate or premium charges under the applicable rate plan approved by the
commissioner for the Underwriting Association comprising these filed
rates. Automobile insurers contracted to the Underwriting Association
pursuant to Section 38-77-590(a) are not required to use the rate or
premium charges under the rate plans approved for the Underwriting
Association by the commissioner for risks not transferred to the
Underwriting Association."
SECTION 42. The Chief Insurance Commissioner shall conduct a
study not to exceed twelve months in duration to determine whether
there are more equitable territories in this State, where private passenger
automobile insurers compete, than now exist which would allow a
greater degree of open-market competition. The commissioner shall
present his findings and conclusions, in writing, to the Governor and the
General Assembly not later than ninety days after the study is concluded
in accordance with this section.
SECTION 43. Notwithstanding any other provision of law, any
person who shall operate or allow an uninsured motor vehicle to be
operated shall suffer the immediate impoundment of such vehicle until
such time as he posts liability insurance in the amount required by
Chapter 77, Title 38 of the 1976 Code of Laws and pays any storage and
impoundment fee, together with any other fines or fees imposed for the
operation of an uninsured motor vehicle.
SECTION 44. The Chief Insurance Commissioner, not later than
December 1, 1993, shall present, in writing, to the Governor and the
General Assembly a proposed uniform merit rating plan as authorized
under Section 38-73-760 of the 1976 Code with surcharges computed as
a percent of the premium, but in all other aspects conforming in
principle to the existing merit rating plan.
SECTION 45. Sections 38-73-1410, 38-73-1425, 38-77-111, 38-77-510, 38-77-595, 38-77-600, 38-77-605, 38-77-610, 38-77-620, and 38-77-625 of the 1976 Code are repealed.
SECTION 46. This act takes effect March 1, 1994.
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